Chief Economist comments on quarterly Wage Price Index 

Good afternoon,

The latest Australian Bureau of Statistics (ABS) quarterly Wage Price Index has revealed for the December quarter of 2021:

• Wages rose 0.7% this quarter and 2.3% over the year.
• The most significant industries to contribute to growth this quarter were the Health Care and social assistance (0.6%), Retail trade (1.2%) and Public administration and safety industries (0.7%).
• Queensland recorded the highest quarterly rate of growth across Australia (0.8%).
• Victoria, South Australia, Western Australia and the Northern Territory all recorded the lowest quarterly growth of 0.5%.

CreditorWatch Chief Economist Harley Dale says: 

“With the Reserve Bank of Australia (RBA) making it crystal clear that it won’t raise official interest rates until signs of sustainable wage inflation emerge, the quarterly Wage Price Index (WPI) is perhaps the most important economic metric of 2022.

“To put it simply, today’s stats show nothing much has moved. It’s a positive, albeit small, story for the Health Care and Social Assistance sector. CreditorWatch data has consistently highlighted the health sector as one of the least at risk of credit default. This is largely due to the dominance of governments’ involvement in combatting the pandemic. However, these actions have understandably crowded out some private health activity, including non-public operators, who may normally undertake some elective surgery within the public hospital system. That equals wage pressure.

“Retail Trade is faring as badly as many expected and we should see a continued upward trend here as restrictions ease across Australia. The CreditorWatch Business Risk Index has consistently highlighted the dilemma faced by retail as lockdowns and mixed messages have created angst and credit risk to this front-line Australian industry. Retail was just getting back on its feet only to be hammered by Omicron in December 2021 and into 2022. There has been much COVID-related structural damage done to Australia’s retail labour force over the summer period and this is showing up in wage pressure due to a lack of readily available skilled labour.

“Some may take today’s update as a signal of an early rate rise and there is some devil in the detail. That is the purview of the RBA – nobody else knows.”