Wages growth outpaces CPI

Strong wages growth has outpaced the rise in Perth’s Consumer Price Index, which rose by 4.2 per cent through the year to the March quarter 2006, much higher than the national increase of 3 per cent.

According to the Australian Bureau of Statistics, the national CPI growth reached the top of the Reserve Bank of Australia's target range for inflation of 3 per cent.

This influenced a decision by the RBA to increase official interest rates by 25 basis points to 5.75 per cent in May 2006.

The main contributor to Perth's CPI growth was housing, which increased by 8.7 per cent, more than double the national average of 3.3 per cent, which was almost entirely due to an increase in new house purchase prices throughout the year.

The latest quarterly increase in WA’s Wage Price Index has lifted the annual rate of wages growth to 4.3 per cent through the year to the March quarter 2006, compared to 4.2 per cent in the previous period.

This was higher than the national increase of 4 per cent.

WA’s booming economy has led to a substantial increase in consumer spending.

Between the June quarter 2004 and the September quarter 2005, WA’s WPI of total hourly rates of pay (excluding bonuses) increased by 6.6 per cent, compared to an increase of 4.8 per cent in Perth’s CPI.

According to the latest ABS Household Expenditure Survey, WA households had increased spending by 30 per cent from1998-99 to 2003-04, also due in part to inflation.

Over the same period, Perth’s CPI rose 16 per cent and the mean gross household income increased 25 per cent to $1,098 per week.

In 2003-04, the broad expenditure groups contributing most to the average weekly household expenditure in WA were food and non-alcoholic beverages (17 per cent), transport (16 per cent), current housing costs (15 per cent) and recreation (14 per cent).

New motor vehicle purchases represented the single largest expenditure item for WA households in 2003-04.