Throughout the recent period of higher than usual inflation, the Reserve Bank of Australia kept telling us that they had to keep hiking rates (even though the inflation trajectory was downward) because they were predicting a wages explosion. Who told them about that? Their so-called business liaison meetings. The business sector is always claiming that a crippling wages breakout is about to happen because they want policy makers to suppress employment growth to give them the upper hand in wage negotiations. Anyway, no such wages explosion occurred. And the latest data shows that things haven’t changed. Today (May 14, 2025), the Australian Bureau of Statistics released the latest – Wage Price Index, Australia – for the March-uarter 2025, which shows that the aggregate wage index rose by 3.4 per cent over the 12 months (up 0.2 points on the last quarter). While most commentators will focus on the nominal wages growth relative to CPI movements, the more accurate estimate of the cost-of-living change is the Employee Selected Living Cost Index, which is still running well above the CPI change. Using that measure, purchasing power of the nominal wages was stable in the March-quarter. There is no wages breakout happening.