Wages are not going up as quickly as inflation, Commonwealth Bank’s latest wage and labour report shows.
The bank’s figures show wage increases are at 3.3 per cent in annual terms, while inflation is running at 4 per cent.
CommBank economist Harry Ottley said neither the minimum and award wage increases handed down by the Fair Work Commission, nor inflation from the US-Iran war, had boosted wages as much as expected.
“Our data is showing that wage growth has not materially responded to higher actual and expected inflation, and the impact of the Fair Work Commission decision has been notable but limited,” Mr Ottley said.
“There is no sign yet that higher inflation is feeding through to wage settings more broadly.”
South Australian, Northern Territory and Tasmanian wages are growing the most, up 3.7 per cent in annual terms, with Victorian and ACT wages rising the least, at 3 per cent.
Earlier this year the Fair Work Commission lifted minimum wage and award rates by 4.75 per cent. This pay rise, coupled with inflationary effects of the war in Iran, could have pushed pay packets higher this year.
“Neither has materially lifted wage growth in our data,” Mr Ottley said.
“The August bump from the FWC decision has proved short-lived as expected and appears to have had a smaller impact than we had initially forecast.”
For the three months to September, wage growth was steady at 0.8 per cent compared with the previous quarter.
Month to month, wage growth dipped from 3.5 to 3.3 per cent.
That 3.3 per cent annual rate is also running at a loss to trimmed mean inflation – the measure which the RBA uses because it cuts out volatile prices – currently sitting at 3.6 per cent.
A lack of wage increases would be “welcome news for the RBA”, the CommBank economist said, in bringing down inflation.
“This somewhat eases the risk that pure wage inflation will become a material additional concern for the RBA’s inflation fight, though there is no shortage of other concerns on that score,” he said.
The big bank’s jobs figures are slightly under the Australian Bureau of Statistics’, with the former’s data pointing to an increase of about 20,000 jobs, seasonally adjusted, in September.
“The recent uptick in our data suggests employment growth may have picked up a little,” Mr Ottley said.
“But the pick-up has been more modest than in the official ABS data. And it has been outpaced by stronger labour supply, with the participation rate rising.
“That’s left the unemployment rate drifting higher, to 4.6 per cent in August, even as labour demand has held up. We continue to expect the unemployment rate to rise further from here.”