The Bank of England also said its slightly lower expectations for gross domestic product (GDP) growth reflected the weaker global outlook - amid stagnation in the eurozone and slowing growth in China.
Private sector domestic demand was also seeing a "softer profile" despite the recent push back in expectations for an interest rate hike.
The report projected solid growth in consumption as households reduce savings but that there remained a risk that they would not be willing to do so "particularly if concerns around the economic outlook build".
Meanwhile, recent weakness in the housing market was bearing down on investment in the sector.
Business investment, though still strong, would be slower than had been previously expected "reflecting the weaker and more uncertain global backdrop".
Wages are rising faster than inflation for the first time since 2009 - but has it come late to influence next May's general election?
Investors in the markets have already made their bets: traders reckon the wage data brings a possible rise in interest rates sooner.