Steady Wages Keep Pressure on RBA, But No Big Surprise for Markets

In the December 2025 quarter (seasonally adjusted), Australia's Wage Price Index (WPI) increased 0.8%, q/q, exactly in line with economists' expectations. With 3.8% annual y/y inflation, salaries grew 3.4%, somewhat behind, suggesting real incomes remain negative. Both the public and private sectors reported the same 0.8% quarterly increase, emphasizing widespread but regulated wage pressures.

Reflecting high demand and structural pressures in the sector, health care and social services stood out sector-wise with a 1.1% q/q rise in original terms. Public sector wages have especially surpassed private sector increases for four straight quarters, supporting the total wage result. This trend shows continued strength in government and service, employment, even as other industries return to normal.

For policymakers and markets, the release presents a sophisticated challenge. The data corroborate constant pay increases amid a constrained labor market, hence challenging the Reserve Bank of Australia's aim of bringing inflation back to target following its most recent interest rate rise. With focus probably to turn toward coming labor indicators like employment and participation statistics for more definite indications on the RBA's next move, the in-line numbers are slightly helpful but not catalytic for AUD traders.