With wage growth rising to an annualised pace over the last six months (or two quarters) of more than 4.0% (given today's data), it is useful to reflect on what the RBA Governor said on this subject to parliamentary testimony only a couple of weeks ago:
"In the [Statement on Monetary Policy] chart there the private numbers at the peak before they went down [during the GFC] were at four or 4½ as well...Three and a half per se across the economy on average in the private sector is not inflation breakout territory [NB: today the y/y wages number rose from 3.5% to 3.9%, with the average rate for the last six months being 4%]. So if it stays there I do not think we have got a problem with overall price pressures. We have got five per cent unemployment as of the January figures that came out yesterday. If our forecasts are right, that will edge down over the next couple of years and we would expect to see overall private wage growth go up some more from where it has been."
