Elsewhere, there are signs of wages growth emerging after a period of stagnation. The Reserve Bank of Australia (RBA) discussed wages as it raised rates for the first time in more than a decade, saying there is “evidence that wages growth is picking up”.
“In a tight labour market, an increasing number of firms are paying higher wages to attract and retain staff, especially in an environment where the cost of living is rising,” said Governor Philip Lowe.
“While aggregate wages growth was subdued during 2021 and no higher than it was prior to the pandemic, the more timely evidence from liaison and business surveys is that larger wage increases are now occurring in many private-sector firms,” he said.
Meanwhile, ANZ Bank senior economist Adelaide Timbrell said they expected wages to continue to accelerate through the impending cash rate hiking cycle, as they did during the 2002–08 cycle.
“Moreover, we expect that unemployment will continue to fall, reaching a five-decade low of 3.3% later this year,” she said.
“This means that some of the impact of higher interest payments and reduced borrowing capacity will be offset by higher household incomes as interest rates rise.”