UK workers' earnings after inflation contracted at the fastest pace since 2014 in the three months to April.
This underscored the growing Brexit squeeze facing many households, official data showed today.
The figures showed the challenge facing Prime Minister Theresa May and her new government, with signs that households are feeling the strain of rising prices since last year's vote to leave the European Union, weighing on the broader economy.
Today's data also showed the unemployment rate in the months between February and April held steady at a more than four-decade low of 4.6%, in line with forecasts.
UK inflation hit an almost four-year high of 2.9% in May, official data showed yesterday, stronger than economists had expected.
The Office for National Statistics said today that workers' total earnings including bonuses after taking into account inflation fell by an annual 0.4% in the three months to April after edging up 0.1% in the first quarter.
That marked the biggest real-terms drop since the three months to September 2014.
In nominal terms, wages grew at the slowest pace since February 2016, rising an annual 2.1% in the three months to April and slowing from 2.3% in the first quarter.
Economists in a Reuters poll had expected wage growth of 2.4%.
The ONS said it had revised its data for wages to improve methodology for earnings from small businesses, resulting in lower estimates for wage levels but little change overall to growth rates.
Excluding bonuses, nominal earnings rose by 1.7% year-on-year, the weakest increase since January 2015 and compared to expectations for a 2% rise.
The Bank of England is watching wage growth closely as it gauges whether the increase in inflation is creating longer-lasting pressure on prices. It expects wages to rise by 2% this year before picking up in 2018 and 2019.
The Bank of England is widely expected to keep interest ratesat their record low of 0.25% when it makes its latest policy announcement later today.
Meanwhile, the ONS said that the number of people in work increased by 109,000 in the three months to April, taking the employment rate to 74.8%, a joint record high.
