| Actual | Previous | Revised | |
|---|---|---|---|
| Quarter over Quarter | 0.8% | 1.0% | 1.1% |
| Year over Year | 3.3% | 3.1% |
Highlights
Australia's wage price index rose 0.8 percent on the quarter in the three months to December, moderating from an increase of 1.1 percent in the three months to September, with year-over-year growth in the index picking up from 3.1 percent to 3.3 percent. This is the eighth consecutive increase in year-over-year growth in wages and the strongest since 2012, providing further evidence that labour market conditions remain tight.
Officials at the Reserve Bank of Australia have highlighted the recent upward trend in wage growth, reinforcing their concerns about inflationary pressures in the economy. Policy rates have been raised by a cumulative 325 basis points since the initial increase in May and the minutes of the RBA's policy meeting earlier this month show that officials expect wages growth will continue to accelerate over 2023. Officials also noted the"the risk of price and wage expectations moving higher" and pledged to pay attention to the evolution of labour costs in coming months. This suggests today's data will likely reinforce the case for another rate increase at the RBA's next meeting early March.
Officials at the Reserve Bank of Australia have highlighted the recent upward trend in wage growth, reinforcing their concerns about inflationary pressures in the economy. Policy rates have been raised by a cumulative 325 basis points since the initial increase in May and the minutes of the RBA's policy meeting earlier this month show that officials expect wages growth will continue to accelerate over 2023. Officials also noted the"the risk of price and wage expectations moving higher" and pledged to pay attention to the evolution of labour costs in coming months. This suggests today's data will likely reinforce the case for another rate increase at the RBA's next meeting early March.
Definition
A measure of the price employers pay for labour due to market factors, specifically wages and salaries. Wages and salaries reflect payments in cash or kind that are made at regular intervals and include: piecework payments; enhanced or special allowances for working overtime or unsocial hours; regular supplementary allowances ; payments for employees away from work for short periods but not including absences for sickness or injury; and bonus and incentive payments.
Description
The wage price index is an easy way to evaluate wage trends and the risk of wage inflation. Officials at the Reserve Bank of Australia closely monitor wage inflation to assess the outlook for consumer prices and broader inflationary pressures. Wage pressures tend to strengthen when economic activity is booming and the demand for labor is rising rapidly. During economic downturns, wage pressures tend to be subdued because labor demand is down. By tracking labor costs, investors can gain a sense the outlook for inflation and monetary policy, with interest rates more likely to rise when wage inflation is high.
