Wages Outpace Inflation, But Growth Shows Signs of Slowing

Wage growth has stayed ahead of inflation over the past year, but it’s showing signs of slowing down, according to the latest figures from the Australian Bureau of Statistics (ABS). For the 12 months leading up to September, wages rose by 3.5%, while inflation, as measured by the Consumer Price Index (CPI), increased by 2.8%. That puts real wage growth at 0.7% for the year.

Interestingly, this is the first time since mid-last year that wage growth has dipped below the 4% mark. During just the September quarter, wages grew by 0.8%, outpacing a 0.2% rise in CPI for the same period.

Another shift this quarter is that public sector wages grew faster than those in the private sector for the first time since December 2020. Public sector wages increased by 3.7% compared to 3.5% in the private sector. Although this public sector growth is a bit higher than last year’s, it’s still lower than the December 2023 peak of 4.2%.

Michelle Marquardt, head of price statistics at the ABS, noted that the recent slowdown in wage growth is partially due to the Fair Work Commission’s annual wage review. The 3.75% increase awarded in July this year was lower than the 5.75% rise last September, as well as the increase of up to 5.2% granted in 2022.