Q1 Wages Expected To Be Consistent With Inflation

The Wage Price Index for Q1 prints today and is a key input into RBA decision making. They will be hoping that it will be close to expectations and thus remain consistent with the inflation target. The RBA May minutes said that its liaison contacts and surveys indicate that wage growth is stabilising. Bloomberg consensus is forecasting an increase of 0.9% q/q and 3.6% y/y in Q1 after 0.8% and 3.3% last quarter.

• Economists’ estimates are in a fairly narrow range of 0.8% to 1.1% q/q and 3.5% to 3.8% y/y. ANZ, NAB and CBA are all in line with consensus, while Westpac is looking for slightly lower at 0.8% and 3.5%.
• The RBA is forecasting a peak in wages growth in Q4 2023 at 4%. This will be particularly dependent on the agreed increase in the minimum wage and some awards from July 1, which will impact around a quarter of workers. The decision is likely to be announced next month.
• Public sector wages have been trailing the private sector due to the timing of agreements. On Tuesday, thousands of federal public sector workers were offered 10.5% over three years by the government after their union asked for 20%. It will include 4% in the first year, 3.5% in the second and 3% in the third. Employees can vote on the proposal until May 30.
• Aged care workers will receive a 15% wage increase from July 1.