Consumer prices index (CPI) inflation unexpectedly fell from 4.4pc to 4pc in March, as supermarket price wars slowed the rise of food prices.
While double the Bank's 2pc target, the figure was seen as welcome news for its policymakers as it had been expected to stick at 4.4pc.
Howard Archer, UK economist at IHS Global Insight said the latest pay figures bolstered the case for interest rates to be kept down at 0.5pc ?for some time to come?.
?The slack in the labour market is preventing high inflation and increased household inflation expectations from feeding through to push up pay significantly and we expect this to remain the case,? he said. ?However, muted pay is less good news for workers who are suffering appreciable real income declines.?
Private sector workers faced smaller wage increases than their public sector counterparts over the past 12 months, at 1.9pc compared to 2.3pc. However, that trend could reverse as the government?s austerity measures and pay freezes are felt in full.
The rates of pay growth in financial services and manufacturing dragged the most on the headline figures.
Financial services workers saw the annual increase in their wages moderate from 5.4pc the previous month to 4.5pc in February ? although this still left workers in the sector enjoying the biggest rate of increase.
Annual pay growth in manufacturing dropped from 2.1pc to 1.2pc.
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