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Stephen Koukoulas - Australian Wages
BY STEPHEN KOUKOULAS - 19/02/2018 | VIEW MORE ARTICLES BY ALAN KOHLER

The news next week on wages will be huge. Not just for judgments about the purchasing power of consumers, but vitally from a more medium-term inflation outlook given that most firms’ wages bills are a driver of future selling prices.

The well-worn story over the past year or so is how weak wages growth has been. The wage price index slumped to a record low annual increase on 1.9 per cent in the middle of 2017 before inching up to 2.0 per cent in the September quarter. This small rise in labour costs is likely a factor in the solid rise in employment in 2017, but it is acting as a hand break on household income and spending.

In terms of what the wages data might mean for monetary policy, the RBA has been banking on a lift in wages to boost inflation and validate its tight hand on monetary policy. Another low result, of 0.5 per cent for the quarter would dash those hopes.

Source: RBA



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