Australia's wage price index rose 0.7 percent on the quarter in the three months to December, easing from growth of 0.8 percent in the three months to September, with year-over-year growth in the index slowing from 3.5 percent to 3.2 percent. This is the slowest year-over-year growth since 2022. Monthly labour market data over that period showed ongoing low unemployment rates and participation rates close to record highs.

In their quarterly assessment of the economic outlook published earlier in the week, officials at the Reserve Bank of Australia noted that conditions in the labour market have tightened in recent months, with incoming data suggesting little prospect that conditions will ease soon. Officials cut policy rates at their meeting this week but expressed caution about loosening policy further.

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.

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.