Inflation set to outpace wages growth despite pay bumps
December wage data is set to remain stable, even though large sections of the workforce pocketed a rise in their weekly pay.
WAGE growth is expected to remain on hold, despite pockets of the workforce receiving pay bumps.
Data for the December quarter will be released by the Australian Bureau of Statistics on Wednesday, with annual growth set to remain steady at 3.4 per cent.
Annual growth has been at 3.4 per cent since the March quarter, despite a rise in quarterly figures.
Should the forecasts hold true, wages would be trending below inflation, which ticked up to 3.8 per cent in the year to December.
The December quarter will bring a pay raise for aged care workers across Australia, which came into effect from October.
The increase in salary was the final stage of wage rises for the sector following a case lodged by the Health Services Union to the Fair Work Commission at the end of 2022.
Wages in aged care have been increasing since 2023, with employees now being paid an extra $433 per week.
NAB senior economist Taylor Nugent predicted wage growth would remain in line with forecasts from the Reserve Bank.
“There will be a boost of around five basis points from the October tranche of pay rises related to the work value case for aged care workers,” he said.
“Wage price index growth has been supported over the past year by public sector wage agreement that incorporate some catch-up growth.”
The most recent wage figures saw pay packets for the private sector rising 0.7 per cent for the September quarter, while public sector wages rose 0.9 per cent.
But a rise in wages has led to more businesses shutting their doors, with figures showing the hospitality sector was under greater pressure than other industries.
The business risk index for January from CreditorWatch showed that 10.4 per cent of service businesses closed in the past year, more than any other sector and double the economy-wide average.
CreditorWatch chief executive Patrick Coghlan said rising wages had squeezed business owners’ margins.
“Asset‑backed pubs and clubs are holding firm, but cafes and restaurants are operating on razor‑thin margins with very little room for error,” he said.
“When overdue invoices in food service are running at more than double the national average, that’s not cyclical noise – it’s sustained financial stress.”
The report said a rise in food prices of more than seven per cent in the past year was also a factor.
Economy-wide, there were 1366 insolvencies during December 2025, the third-highest monthly total recorded.
