CANBERRA, AAP – Economists expect wage pressures remained subdued in the first three months of the year, even as the economy rebounded strongly and unemployment fell faster than many had predicted.
Wednesday’s release of the wage price index for the March quarter – a key gauge used by the Reserve Bank and Treasury to measure wages growth – is forecast to rise by 0.5 per cent, slightly smaller than the 0.6 per cent increase recorded three months earlier.
This will leave the annual rate at just 1.4 per cent, and way short of what the RBA wants to see to return inflation to some sort of normality.
The minutes of the RBA’s May 4 board meeting released on Tuesday reiterated the cash rate won’t rise until inflation is sustainably between two and three per cent, which will need wage growth of above three per cent.
Last week’s federal budget forecasts wages only growing by 2.75 per cent by 2024/25 after either trailing or being flat to inflation before then.
Meanwhile, Treasurer Josh Frydenberg’s big-spending budget provided only a modest lift to consumer confidence, as gauged by the ANZ and Roy Morgan.
Its weekly index – a pointer to future household spending – rose 0.8 per cent.
However, ANZ thought the increase was just as much in response to Sydney’s recent clean sheet regarding new COVID-19 cases after a “mystery” infection the previous week.
Confidence among Sydneysiders jumped 5.4 per cent.
The Westpac-Melbourne Institute monthly consumer sentiment survey is also due on Wednesday.
The survey will contain responses to specific questions on the budget.