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Wage price index up 1.2%

Wage price index up 1.2%

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Date Published : Wednesday, August 13, 2008

Official figures show that wages in Australia were up 1.2 per cent for the second quarter, in seasonally adjusted terms.

The spike was on the back of a 0.9 per cent increase in the first quarter and represented the largest since the index began in 1997.

Data released by the Australian Bureau of Statistics also shows that the wage price index rose 4.2 per cent from the second quarter of last year.

The increase was slightly higher than the market had been expected with forecasts predicting a one per cent rise in the June quarter and an annual climb of 4.1 per cent.

However, for the year to June the increase of 4.2 per cent is still below the 4.5 per cent yearly rise in the consumer price index.

Reports suggest that the larger-than-expected rise in wages will not prohibit the Reserve Bank of Australia (RBA) from cutting interest rates before the end of the year, which is good news for those with a loan or a mortgage.

Michael Workman, senior economist at the Commonwealth Bank of Australia, claims the next cut in interest rates is likely to be in November, despite the wage price index increase: "There's still no issue on the wages side so it won't prevent the RBA cutting rates."

"The wages numbers overall would need to be pushing through to 4.5 per cent (annually) to be an issue," he added.

Lehman Brothers chief economist Stephen Roberts, speaking to news.com.au, also agreed that concerns about rising inflation suggest that a cut in November "is a likelihood rather than September".

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