Australia's wage growth remains high, exacerbating the Reserve Bank of Australia's challenge of fighting inflation.

In the last quarter, Australia's annual wage growth rate remained high, highlighting the continued tightness in the labor market. After the rate hike this month, the inflation challenge faced by the Reserve Bank of Australia has been further exacerbated. Data released by the Australian Bureau of Statistics on Wednesday showed that in the three months leading up to December of last year, the wage price index rose by 3.4% year-on-year, in line with economists' expectations, and by 0.8% quarter-on-quarter. The data also showed that public sector wage growth has been faster than the private sector for the fourth consecutive quarter. Michelle Marquardt, director of prices statistics at the Australian Bureau of Statistics, said, "Public sector wages increased significantly in 2025 due to new public sector agreements reached by the states, resulting in multiple pay rises throughout the year." Prior to the release of this data, the Reserve Bank of Australia had become the first central bank in the world to raise interest rates this year, citing persistent inflation, demand constraints, and a still relatively loose financial environment. In the minutes of the February 2-3 meeting, the central bank pointed out that the unit labor cost of combined wage growth and productivity remained high, indicating that the labor market "remains tight." The Reserve Bank of Australia is closely monitoring businesses' pricing behavior. Currently, Australia's unemployment rate remains at a low of 4.1%, inflation is above the target range of 2%-3%, and consumer spending is stronger than expected. This situation has led Governor Michelle Bullock to signal that there could be further rate hikes.