Wage growth has slipped below the rate of inflation, a development that threatens damage to living standards and the wider economy through an erosion of household spending power.
The Office for National Statistics (ONS) reported that average wages, when the effects of bonuses were excluded, grew by 2.2% in the three months to February.
While that was slightly better than economists had predicted, it still marked a 0.1% fall on the previous month's figure.
It means that in real terms - taking into account inflation - wages are being squeezed at the fastest rate in three years.
:: How pay figures add up to a dismal picture
The Consumer Price Index measure of inflation stood at 2.3% in February and remained steady in figures for the following month, released on Tuesday .
Inflation was lower in December and January meaning that for the three months covered by the wage data, earnings growth was still just about higher than cost of living increases - but only by about 0.1%, the weakest since 2014.
The development adds further pressure to family budgets already being squeezed since the leap in inflation began last winter - largely caused by the effects of the weak pound in the wake of the Brexit vote.
The pummelling for the pound has made imported goods and services more expensive - steadily ramping up domestic prices.
At the same time many commodity costs, such as oil, have increased.
Chancellor Philip Hammond acknowledged the pressure on prices thanks to sterling's fall saying: "We will have to cope with that as it passes through our economy."
But he pointed to the UK's "underlying resilience" with jobs growing - and said while inflation was forecast to be higher this year it was expected to decline in 2018.
But Labour's shadow work and pensions secretary Debbie Abrahams said: "The Government's abysmal record on living standards is getting even worse.
"Real wages are now stagnating under the Tories and working families are worse off as a result."
Rising inflation, which is tipped to grow further this month as the later Easter is reflected in air fares, puts pressure on the Bank of England to raise interest rates, but policymakers have signalled concerns that such a move could put a choke on growth in the economy.
There were few signs of trouble though in the wider employment figures reported by the ONS.
It said unemployment had fallen to its lowest level in a decade - down 45,000 in the three months to February to 1.56 million - with the jobless rate remaining at 4.7% and a record number of job vacancies on offer.
The employment rate of 74.6% was the joint highest since records began in 1971.
Senior ONS statistician David Freeman said: "A joint record employment rate and a new record high for the number of vacancies point to continued strength in the labour market."
But Howard Archer, chief UK and European economist at IHS Markit (Stuttgart: A1139A - news) , said: "Deteriorating consumer purchasing power and likely increasing business uncertainties and caution over Brexit are expected to take a mounting toll on growth and employment."
He forecast the jobless rate would reach 5.1% by the end of the year.