CONSERVATIVE and Liberal Democrat headquarters will be keenly watching out for the latest wage figures today to see whether or not pay is now outstripping inflation, which has fallen for the sixth consecutive month to 1.6%.

David Cameron, Nick Clegg and their colleagues will hope the numbers provide a landmark moment in the run-up to the next General Election by throwing into question Ed Miliband and Labour's key narrative about the cost of living crisis.

Figures published by the Office for National Statistics(ONS) yesterday showed the Consumer Prices Index (CPI) rate of inflation dropped to a new four-year low of 1.6%, from 1.7% in February.

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The expectation is the ONS's Labour market statistics this morning will put regular pay rising at a rate of 1.8%, up from 1.3%. This would be a significant milestone on the road to economic recovery as it would mark an end to a six-year period when pay growth has been lagging behind the rise in the cost of living, effectively shrinking workers' spending power.

Responding to the latest CPI number, George Osborne said: "These latest inflation numbers are welcome news for families. Lower inflation and rising job numbers show our long-term plan is working and bringing greater economic security.

However, the Chancellor stressed: "There is still much more we need to do to build the resilient economy I spoke of at the Budget."

His LibDem colleague, Danny Alexander, the Chief Secretary to the Treasury, said: "Inflation slowed to 1.6%; easing inflation, more jobs and a growing economy are further evidence that the plan is working."

Prime Minister David Cameron tweeted: "Welcome news inflation has fallen again, meaning more financial security for hardworking families."

For Labour, Shabana Mahmood said at long last it looked as if average wages would soon be rising faster than CPI inflation but stressed that a huge turnaround was still needed to ensure people were not worse off than when the Prime Minister came to power.

The Shadow Treasury Minister said: "Real wages have fallen by £1600 a year since 2010 and, on top of this, tax and benefit changes will see the average household £1000 a year worse off by next year.

"It would be deeply complacent and out of touch for Ministers to try and tell people the cost of living crisis is over on the basis of one or two statistics."

Frances O'Grady, General Secretary of the TUC, noted: "A real recovery will deliver rising real wages that recover spending power lost since the crash and generate decent jobs with good pay, security and prospects. That remains a distant prospect."