| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Quarter over Quarter | 0.9% | 0.8% | 0.8% | |
| Year over Year | 3.6% | 3.7% | 3.3% | 3.4% |
Highlights
Australia's wage price index rose 0.8 percent on the quarter in the three months to March, as it did in the three months to December, with year-over-year growth in the index picking up from 3.4 percent to 3.7 percent. This is the ninth 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 strength in wage growth, reinforcing their concerns about inflationary pressures in the economy. Policy rates have been raised by a cumulative 375 basis points since the initial increase in May 2022 and the minutes of the RBA's policy meeting earlier this month show that officials expect wages growth will strengthen further to around 4.0 percent later this year. Officials also highlighted the risk that weak productivity growth could result in higher wages keeping inflation pressures too high. This suggests today's data may reinforce the case for further policy tightening in coming months.
Officials at the Reserve Bank of Australia have highlighted the recent strength in wage growth, reinforcing their concerns about inflationary pressures in the economy. Policy rates have been raised by a cumulative 375 basis points since the initial increase in May 2022 and the minutes of the RBA's policy meeting earlier this month show that officials expect wages growth will strengthen further to around 4.0 percent later this year. Officials also highlighted the risk that weak productivity growth could result in higher wages keeping inflation pressures too high. This suggests today's data may reinforce the case for further policy tightening in coming months.
Market Consensus Before Announcement
Wage growth is expected to show increasing pressure in the first quarter, rising 0.9 percent on the quarter and 3.6 percent on the year. These would compare with fourth-quarter rates of 0.8 and 3.3 percent.
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.
