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MNI BRIEF: RBA Says Private Sector Wage Growth Quickened In Q4

(MNI) Perth

The Reserve Bank of Australia said private sector wages growth increased to a 4.5% y/y pace in the December quarter, according to insights from their liaison team in the Statement on Monetary Policy released Friday.

The acceleration in private sector wage growth from 3.5% y/y in the September quarter underscores the RBA's concerns about the threat of a wage-price spiral. The statement sad around one-third of private sector firms reported wages increases of above 5% in the December quarter. Firms expect some stabilisation in wages growth over coming quarters.

The RBA lifted its forecast for the Wage Price Index to 4.1% for June, up from 3.7% in the November statement. The Q4 WPI will be released on February 22, with some economists viewing a strong print as justification for a 25bp hike at the March meeting. The RBA raised rates 25bp to 3.35% on Tuesday and indicated more increases were needed.

Wages growth has supported household spending despite higher rates and elevated inflation. The RBA lifted its growth forecast for the year to June to 2.25%, up from 2% y/y in the November SMP. (See MNI BRIEF: RBA Ups Inflation Forecast, Warns More Hikes Needed)

Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Robert covers RBA and RBNZ policy and the economy for MNI in Australia.

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