Australian wages posted a solid rise last quarter in an important support for household incomes, but wage growth also risks becoming an increasing source of inflationary pressure given the country's dire productivity performance. The government's main measure of wage costs rose 0.9 percent in the second quarter, compared to a 0.8 percent increase the previous quarter. Annual growth stood at 3.8 percent, up from 3.1 percent at the same stage of 2010.
Such a pace would not normally be a worry for the Reserve Bank of Australia (RBA) but with productivity growth having all but stalled, wages are now more of a threat to inflation.
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