Good news for Britain's consumers on Wednesday after official data on the UK labour market showed employers were responding to pressure to lift workers' pay as the unemployment rate fell to a 42-year low.
Average earnings growth has failed to match the pace of inflation in recent months, and although consumer prices (CPI) held steady in July, data on Tuesday showed, the rise in wage growth in June will come as some relief.
With so much slack taken out of the labour market by consistent rises in employment levels, many had predicted wage growth would soon pick up some momentum.
"The latest labour market figures provided some signs that the tightening in the labour market may be leading to a recovery in wage growth at long last," said Ruth Gregory, UK economist at Capital Economics.
The data showed that in the three months to June average annual earnings increased 2.1%, up from an upwardly revised 1.9% in May.
Analysts had expected the rate to remain at the original assessment for May, which had been 1.8%.
"This is undoubtedly good news for the man on the street, as it suggests that inflation pressures are starting to ease for consumers, but wage growth is still subdued compared to historical standards," said Jake Trask, FX research director at OFX.
The number of unemployed fell to 1.48m in June, 157,000 fewer than in the same month a year ago, leaving the unemployment rate at 4.4%, down from 4.9% in May.
It was the lowest rate of unemployment since 1975.
Job creation was also impressive, with 125,000 new positions created in the three months to June, higher than the expected 97,000.
Bank of England
The tighter labour market and signs of wage growth brought back into focus the question of the Bank of England's interest rate policy.
The vote at the last monetary policy committee (MPC) meeting was 6-2 in favour of keeping rates on hold at the current level of 0.25%, as it expects real wage growth to remain negative this year.
But the gap is narrowing. With CPI at 2.6% and wage growth at 2.1%, the shortfall in real wages was down to 0.5 percentage points in July, from 0.8 in June.
"Although real wages remain in negative territory, if they recover faster than the Bank expects then we could see the BoE take steps to prepare the market for a rate hike sometime in 2018," said Kathleen Brooks at City Index.
The pound immediately gained ground against both the dollar and euro.
Sterling climbed 0.2% to $1.2895 versus the US currency, and was 0.2% higher against the shared currency at €1.0986.
Stocks were also higher, with the FTSE 100 index climbing 0.6% to 7,426.05 in mid-morning trade.