Data Shows Cost of Living Rising Faster Than Paychecks

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Inflation has overtaken wage growth for the first time in two years, according to new data from the Australian Bureau of Statistics.

Figures show wages rose 0.8% in the December quarter, lifting annual pay growth to 3.4%. But with inflation sitting at 3.8%, real wages slipped by about 0.4% over the quarter. The wage index does not include bonuses or overtime.

Public sector pay grew faster than private wages, rising 4.0% compared to 3.4%, driven mainly by government-funded increases in health and childcare.

Treasurer Jim Chalmers said inflation remains higher than desired but stressed that wages have been growing above 3% for more than three years. He said the government remains focused on easing inflation, lifting productivity, and managing global uncertainty.

Shadow Treasurer Tim Wilson took aim at the government, saying inflation is still eroding household incomes and that Australians are falling behind despite working hard.

Former Reserve Bank governor Philip Lowe also weighed in, warning that weak productivity and ongoing government spending were keeping inflation stubborn. He said if demand keeps rising without stronger supply, interest rates may need to stay higher for longer.

The data highlights ongoing pressure on household budgets, even as wages continue to grow.

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