Bullock Warns as Wage Growth Slows to 3.2%

Private sector wage growth slowed to 3.2% in the year to March, and wages rose 0.76% in the March quarter. Inflation was 4.6%, so pay gains still lagged prices and the real value of wages fell for workers.

Bullock's inflation warning

Michele Bullock said last week she worries higher wage increases could seep into business pricing and become the norm. She said businesses could end up thinking, “well, that’s now the norm”.

“will end up with higher wage increases and that will feed through into businesses and businesses think, ‘well, that’s now the norm’. That’s the inflation expectations worry that I have” — Michele Bullock. Her warning sits against a March-quarter result that was slower than the pace seen at the end of 2024 and the weakest annual rate since the middle of 2022.

March quarter at 0.76%

0.76% was the private-sector rise in the March quarter, a pace that leaves wage earners moving more slowly than prices. The latest reading means the slowdown is not just annual noise; it is showing up in the quarterly flow of pay packets as well.

3.2% annual wage growth is still below 4.6% inflation, and that gap leaves workers with less purchasing power even after a pay rise. For employees, the practical issue is that a nominal increase does not buy the same amount of goods and services when price growth runs faster.

Budget offset for wage earners

$250 was the only new tax cut in Tuesday's budget, through the working Australia tax offset. It applies only to wages and salary earners, not to income generated through investments, which keeps the relief narrowly aimed at pay packets rather than asset income.

50% was the capital gains tax discount that lifted the benefit to non-wage earners and encouraged investment in rental properties rather than shares. The article ties that system to worse housing affordability and greater income inequality, leaving the budget's offset as a small return toward fairness for people who live off wages.