| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Quarter over Quarter | 1.0% | 0.9% to 1.0% | 0.8% | 0.9% |
| Year over Year | 4.4% | 4.2% to 4.4% | 4.1% | 4.2% |
Highlights
Australia's wage price index rose 0.8 percent on the quarter in the three months to March after advancing 0.9 percent in the three months to December, with year-over-year growth in the index easing from 4.2 percent to 4.1 percent. Monthly labour market data over that period showed ongoing low unemployment rates and participation rates close to record highs.
Today's data are in line with an assessment made by officials at the Reserve Bank of Australia at their most recent policy meeting last week that conditions in the labour market remain tighter than what is consistent with returning inflation to target. Officials noted then that"wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth." Today's data will therefore likely reinforce their concerns about upside risks to their inflation forecast and their assessment that policy settings need to remain restrictive.
Today's data are in line with an assessment made by officials at the Reserve Bank of Australia at their most recent policy meeting last week that conditions in the labour market remain tighter than what is consistent with returning inflation to target. Officials noted then that"wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth." Today's data will therefore likely reinforce their concerns about upside risks to their inflation forecast and their assessment that policy settings need to remain restrictive.
Market Consensus Before Announcement
Australia's seasonally adjusted wage price index is forecast to rise 1.0 percent on quarter in the January-March period after rising 0.9 percent in October-December and 1.3 percent in the prior quarter. The year-over-year rate of wage growth is seen accelerating to 4.4 percent in the first quarter from 4.2 percent in the fourth quarter and 4.0 percent previously.
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.
