Anthony Albanese gets campaign boost with inflation going up by 2.4 per cent in year to March

Anthony Albanese has had a new campaign boost just three days out from the election with new data showing wages are increasing at less than half the rate of inflation. 

The wage price index in the year to March rose by just 2.4 per cent even though unemployment is at a 48-year low, the Australian Bureau of Statistics revealed on Wednesday.

During the same period, headline inflation soared by 5.1 per cent – the fastest pace in 21 years after the GST was introduced – which means workers have effectively had a pay cut.

The Labor leader has indicated he would be in favour of the minimum wage increasing at the rate of inflation should he win Saturday’s election.

Anthony Albanese has had a new campaign boost just three days from the election with new data showing wages are increasing at less than half the rate of inflation

He has been campaigning on the theme of everything going up except your wages after average petrol prices this year soared above $2 a litre for the first time ever. 

Private sector workers had a 2.4 per cent pay increase while public servants made do with a small 2.2 per cent raise.

Real estate agents and rental property managers had the most generous increase of 3.1 per cent. 

Australian wages growth has remained stuck below the long-term average of 3 per cent since mid-2013 even though unemployment in March fell to 3.95 per cent – the lowest since 1974.

In the March budget, Treasury forecast the wage price index hitting 3.25 per cent during the upcoming 2022-23 financial year but so far there is very little sign of that. 

A disappointing wage increase in the March quarter means the Reserve Bank of Australia may be a little less likely to impose a bigger interest rate rise in June. 

The RBA this month forecast inflation hitting 6 per cent by the end of 2022 and noted workers were effectively getting a pay cut if wages didn’t rise in line with inflation. 

‘Despite low unemployment rates, wages growth has not kept pace with inflation, so real wages have declined – in some cases noticeably,’ it said.

See also  NEU bosses warn they will ballot teachers on walkout this autumn

The wage price index in the year to March rose by just 2.4 per cent even though unemployment is at a 48-year low. During the same period, headline inflation soared by 5.1 per cent – the fastest pace in 21 years (pictured is a Sydney cafe worker)

KPMG senior economist Sarah Hunter said the weak wages growth would make the RBA think twice about imposing a bigger 0.4 percentage point cash rate increase in June, to follow on from May’s 0.25 percentage point rise.

‘These figures by themselves are unlikely to push the RBA into a more aggressive pace of rate rises – though we still expect to see four more moves this year, to take the cash rate to 1.25 per cent,’ she said.

The cash rate rose from a record-low of 0.1 per cent on May 3 to 0.35 per cent.

Under an old centralised industrial relations system in the early 1980s, Australia had a wage-inflation spiral where double-digit pay increases fed into double-digit inflation. 

In 1981, Australia had a headline inflation rate of 11 per as average wages rose by 14 per cent and minimum wages went up by 3.6 per cent, historic data from the RBA and the ABS showed.