Australia’s wage growth held steady on a quarterly basis but continued to cool over the year, offering some reassurance that labor-cost pressures are not reaccelerating. Wage Price Index rose 0.8% q/q in Q2, matching expectations and extending the same quarterly pace for a fifth consecutive quarter. Annual wage growth slowed from 3.4% a year earlier to 3.2%, remaining well below the 4.3% peak reached in late 2023.
Moderation was clearer in private sector. Private wages rose 0.7% q/q, while annual growth eased from 3.2% in Q1 to 3.1%, and from 3.4% in Q2 2025. Public-sector wages were firmer at 0.9% q/q and 3.4% y/y, with annual growth unchanged from Q1 but down from 3.7% a year earlier. Public-sector pay has now outpaced private-sector growth for six consecutive quarters, driven in Q2 by state government public-service increases and scheduled Commonwealth agreement rises.
The distribution of wage increases also points toward gradual cooling. 79% of jobs recorded wage rises of less than 4% over the past year, up from 75% a year earlier and highest share since Q2 2022. ABS said decline in larger pay rises has contributed to slower overall wage growth. In original terms, Public administration and safety recorded a 1.1% quarterly increase, while Health care and social assistance rose 0.5%.
For RBA, report does not eliminate inflation concerns, but it offers little evidence that wages are becoming a fresh source of upside pressure. Board has deliberately kept another rate hike on table if inflation risks materialize, yet slowing annual wage growth and softer private-sector pay reduce urgency from labor-cost side. With public-sector wages still comparatively firm, RBA is unlikely to dismiss wage pressures entirely, but upcoming inflation and employment data should carry greater weight in determining whether retained tightening bias needs to be used.
Data Summary
| Indicator | Actual | Expected | Previous |
|---|---|---|---|
| Wage Price Index q/q | 0.8% | 0.8% | 0.8% |
| Wage Price Index y/y | 3.2% | — | 3.3% |
| Private Sector Wages q/q | 0.7% | — | 0.8% |
| Private Sector Wages y/y | 3.1% | — | 3.2% |
| Public Sector Wages q/q | 0.9% | — | 0.8% |
| Public Sector Wages y/y | 3.4% | — | 3.4% |
| Jobs with wage rises below 4% | 79% | — | 75%* |
| Public Administration & Safety q/q | 1.1% | — | — |
| Health Care & Social Assistance q/q | 0.5% | — | — |
*Compared with Q2 2025.
Key Takeaways
- Australia Wage Price Index rose 0.8% q/q for a fifth consecutive quarter, matching expectations.
- Annual wage growth eased to 3.2%, down from 3.4% a year earlier and well below late-2023 peak of 4.3%.
- Private-sector wages softened further, with annual growth easing from 3.2% to 3.1%.
- Public-sector wages remained firmer at 3.4% y/y, outpacing private-sector growth for a sixth straight quarter.
- State government wage rises and scheduled Commonwealth pay increases were key supports to public-sector growth.
- 79% of jobs recorded wage rises below 4%, up from 75% a year earlier, showing larger pay increases are becoming less common.
- For RBA, data do not point to renewed wage acceleration. That reduces urgency for another hike from labor-cost side, even as Board keeps tightening option open if broader inflation risks strengthen.
