Wages Surprise To Downside, Consistent With Inflation Target

The Wages Price Index (WPI) surprised to the downside rising 0.8% q/q to be up 3.3% y/y from 3.2% in Q3. The quarterly increase was also less than Q3’s upwardly revised 1.1% q/q, which had been impacted by the 5.2% national minimum wage rise in July, but in line with Q2’s 0.8% rise. The data show that while wage rises are continuing they were not accelerating at the end of last year, which will be good news for the RBA but likely to drive more rhetoric and policies from the government to boost wage growth.

• The ABS notes that while Q4’s WPI rise was lower than Q3 it was also the highest rise in Q4 over the last 10 years. The annual rate is the highest since Q4 2012. But real wages remain very negative.
• 21% of private sector jobs recorded a wage rise which was down from 23% in Q4 2021 but the increases received were 4%, down slightly from Q3’s 4.3% but significantly higher than Q4 2021’s 2.8%. It is in line with what the RBA says is consistent with its inflation target.
• Private sector wages rose 0.8% q/q compared with the public sector at 0.7% with the large gap between annual rates continuing at 3.6% versus 2.5%. The gap has been driven by many public sector agreements being multi-year.