Workers saw the highest annual rate of wage growth in eight years last quarter, but the increase will do little to ease the soaring cost of living.
Although workers enjoyed a 2.6 per cent boost to their pay packets in the year to June, with inflation sitting at 6.1 per cent, real wages went backwards by 3.3 per cent.
On a quarterly basis, wages grew by 0.7 per cent.
The wage price index figures were slightly below expectations, with many economists anticipating fairly weak wage growth despite how challenging it has become to find workers.
Most expect wage growth to accelerate, but inflation to continue outstripping pay by a decent margin.
Capital Economics senior economist Marcel Thieliant says the hike to the minimum wage that kicked in July 1 will drive up growth in workers’ pay this quarter alongside the tight labour market.
Treasurer Jim Chalmers said the inflation challenge was driving a fall in real wages.
He said he wanted to see wages growing “sustainably”.
“That will be determined by how quickly we can grow this economy without adding to these inflationary pressures, which are holding us back right now,” he told reporters in Canberra.
The wage data, released by the Australian Bureau of Statistics on Wednesday, will feed into the Reserve Bank of Australia’s cash rate decision next month.
NAB’s Tapas Strickland says the wage index showed the pressure on pay packets is building, and supports the RBA’s need to get interest rates back to a neutral level.
Mr Strickland says a 50-basis-point cash rate hike next month would get the cash rate back into that territory.
ANZ senior economist Catherine Birch also thinks a 50-basis-point cash rate hike is the most likely scenario.
(Australian Associated Press)