Wages grew at a record annual pace between April and June, according to new figures from the Office for National Statistics.
Regular pay grew by 7.8%, the highest annual growth rate since comparable records began in 2001.
Inflation, which measures the pace at which prices are rising, has eased but remains relatively high at 7.9%.
But Darren Morgan from the ONS said Tuesday’s figures suggested “people’s real pay is recovering”.
Mr Morgan, the ONS’s director of economic statistics, said that basic pay “is growing at its fastest since current records began”.
“Coupled with lower inflation, this means the position on people’s real pay is recovering and now looks a bit better than a few months back.”
However, wage growth is still not quite outstripping the pace of price rises. Mr Morgan told the BBC’s Today programme that real pay growth, when taking into account the rate of inflation, “is still falling a little”.
Figures show that taking into account the Consumer Prices Index (CPI) measure of inflation, average regular pay fell by 0.6%.
New inflation figures are due out on Wednesday and are expected to show price growth slowed again during July.
Simon French, chief economist at Panmure Gordon, said that inflation could fall to 7% or even 6.8%. However, that remains far higher than the Bank of England’s target to keep inflation at 2%.
Strong pay growth means the Bank of England could raise interest rates again in September, from the current rate of 5.25%.
There are signs in the ONS’s data that the UK employment market is easing, The jobless rate rose from 4% to 4.2%, while the number of people in employment ticked lower.
“The fall in employment in the three months to June and further rise in the unemployment rate will be welcomed by the Bank of England as a sign labour market conditions are cooling, ” said Ruth Gregory, deputy chief UK economist at Capital Economics.
However, she added, given that wage growth is still accelerating, she expects the Bank of England to increase its key interest rate again to 5.5% before ending the current run of rate rises.
The number of vacancies in the UK jobs market fell again, down 66,000 between May and July. However, there are still more than one million vacancies.
Finding enough people to fill vacancies is one of the biggest business barriers facing Candice Mason, the owner of Masons Minibus & Coach Hire.
“It is just dire,” she told the Today programme. “It is not just me, it is every operator that I speak to, we just cannot recruit and staff our companies properly.”
Ms Mason said the company had increased its wages to attract to fill shifts left by employees who, following Covid lockdowns, decided they wanted a better work-life balance and therefore are working fewer days.
“But, of course, that created a bigger gap of needing to recruit anyway,” she said. “It honestly has just been relentless since we came out of lockdown. It is the most difficult part of the business at the moment.”