Paul Dales at Capital Economics says the decline was “encouraging” as it showed households were willing to whittle down their savings to “carry on spending”.

He adds: “A continuation of this trend is the key reason why we suspect that the economy will probably avoid a recession this year even as real incomes fall further.”

The prospects for more sustained growth, however, are bleak.

Inflation of 1.4pc over the final quarter of last year outstripped nominal rises in disposable income, which was 1.3pc, the ONS found. This indicated that price rises are already starting to strip away families’ spending power.

Suren Thiru, head of economics at the British Chambers of Commerce, says companies are under increasing pressure from surging costs and higher taxes on employment, which is threatening their ability to pay higher wages.

He thinks the official forecasts from the Office for Budget Responsibility (OBR) – which anticipates average pay rises of 5.3pc – are too optimistic, despite the fact they are already failing to keep up with price rises of 7.4pc this year.

“We don’t think wage growth can be sustained,” he says. “We are more pessimistic than [the OBR]. Businesses are not sponges, they cannot keep absorbing all of these costs.”

Similarly, this financial pressure is undermining businesses ability and willingness to ramp up investment, which is bad news for both current and future growth.

“Investment will struggle to recover. The OBR forecasts business investment [growth] of 10pc this year, which is pretty optimistic, even if it is from a low base,” says Thiru.

“We think the headwinds from the cost pressures businesses are facing now, but also uncertainty over the medium-term outlook for the UK and global economy, is having an impact on investment intentions.”