Wages should begin to grow with the economy, setting the stage for living standards to improve, but there is a lot of ground to make up.
Figures on rising private sector wages are politically explosive and could change the debate on the economy.
It might not feel it - the country is still emerging from a six year downturn - but the numbers are puzzlingly good.
Inflation matching wage rises in the private sector brought more good news for George Osborne and the Conservative party today, but less good news for Labour, as the figures could go some way to weaken their argument on the cost of living crisis they say ordinary people continue to endure.
ITV News Political Editor Tom Bradby reports on what the figures mean for political parties:
Prime Minister David Cameron welcomed today's inflation figures, saying that they are proof the government's long-term economic plan is working.
Speaking from Hull, Mr Cameron said the figures show that the recovery is gathering pace and the rate of inflation is helping people live a "better standard of life".
Speaking during a trip to Tata Steel in Port Talbot, Wales, Chancellor George Osborne said today's figures showing that inflation had dropped to a four-year low was "further evidence that the Government's longterm economic plan is working."
House prices increased by 6.8% in January 2014 compared with a year earlier, according to the latest figures from the Office for National Statistics .
The ONS said prices grew by 7.1% in England, 6.9% in Wales, 1.4% in Scotland and 2.7% in Northern Ireland.
In January 2014, prices paid by first-time buyers were 7.6% higher on average than in January 2013.
For existing owners, prices increased by 6.5% for the same period.
Responding to today’s inflation figures, Labour welcomed the rise but said that prices are still rising faster than wages.
– Catherine McKinnell, Labour’s Shadow Treasury Minister
This fall in the inflation rate is welcome, but the squeeze continues as prices are still rising faster than wages.
Working people facing this cost-of-living crisis are on average £1,600 a year worse off since David Cameron came to office.
- The largest contribution to the rate fall came from lower petrol prices, utility bills and clothing and footwear
- Furniture and household goods became more expensive
- Books were 6.6% dearer on the year
- Tablet computers and printers were more expensive
- Inflation in food and non-alcoholic drinks fell to 1.8%
- CPIH - a new measure of inflation - fell to 1.6%, down from 1.8% in January
- RPIJ fell to 2%, down from 2.1% in January.
Lower petrol prices helped inflation fall to a new four-year low of 1.7% in February, official figures showed today.
It marks the fifth monthly slowdown in a row.
Petrol prices dropped 0.8p per litre between January and February this year, compared with a 4p rise for the same period in 2013.
The Consumer Prices Index rate fell from 1.9% in January as it continued to fall short of the Bank of England's target of 2%, the Office for National Statistics said. CPI has not been lower since October 2009, when it stood at 1.5%.
The fall in inflation to 1.7% was widely predicted and suggests private sector pay growth - which was also 1.7% in the three months to January - has already caught up.
However, total wages are only rising by 1.4%, with ordinary public sector workers seeing a rise of just 0.9%, according to the latest figures.