Invest
Latest wages data suggests a June rate rise of 25 bps
The Australian Bureau of Statistics has released the latest wage price index.
Latest wages data suggests a June rate rise of 25 bps
Wages grew by 0.7 per cent during the March quarter, according to the latest wage price index (WPI) from the Australian Bureau of Statistics (ABS).
The lift, which was slightly below market expectations, brought the annual rate of growth to 2.4 per cent, up from 2.3 per cent in the previous quarter.
“The annual rate of wage growth has risen for each of the last five quarters from a low point of 1.4 per cent in December quarter 2020,” said ABS head of price statistics Michelle Marquardt.
The ABS said that rises across the private sector were the main driver of growth during the quarter, with an increase of 0.7 per cent quarterly and 2.4 per cent annually.
Meanwhile, public sector wages grew by 0.6 per cent in the March quarter 2022 and 2.2 per cent annually.
ANZ head of Australian economics David Plank had warned that a quarterly rise for the WPI above its forecast of 0.8 per cent would have increased the likelihood of a 40 basis point rate hike by the Reserve Bank (RBA) in June.
“A 40 bp rate hike was on the table in May and will likely be discussed by the board in June, though the board’s stated preference is to return ‘to normal operating procedures’,” he noted.
“This suggests that going more than 25 bps in June will require, as [Philip] Lowe said in his post meeting comments, ‘a very strong argument to do so’.”
Commonwealth Bank head of Australian economics Gareth Aird said that a WPI figure in line with expectations would be consistent with what RBA governor Lowe has described as a “business as usual” hike of 25 bps in June.
“A rate hike of more than 25 bps at the June Board meeting would put unnecessary angst into a household sector that is already quite concerned about the economic outlook, in part because of the expectation of higher rates,” he warned.
NAB economists, who accurately predicted the quarterly lift of 0.7 per cent, flagged the potential for higher wages growth moving forward.
“With unemployment to remain low, we see wage growth continuing to edge higher over the year, likely passing 3 per cent y/y around December – a rate of wage growth not seen in over a decade,” they said.
The RBA’s May statement on monetary policy forecast that the WPI would pick up to around 3 per cent by the end of this year.
“Wages growth is then forecast to strengthen further as the unemployment rate declines, to be 3.75 per cent by mid-2024; this would be the fastest pace since 2012,” the RBA predicted.
RELATED ARTICLES
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more
Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more
Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more
Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more
Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more
Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more
Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more
