Introduction to Wage Growth
Last week, the Commonwealth Bank of Australia (CBA) released its wage tracker for December. This tracker provides an early look at wage growth by analyzing de-identified salary flows from around 400,000 CBA accounts.
Wage Growth Trends
In the December quarter of 2025, CBA recorded annual wage growth of only 3.1%. This is significantly lower than the 3.4% Consumer Price Index (CPI) inflation increase recorded by the Australian Bureau of Statistics (ABS) in the year to November. The gap between wage growth and inflation suggests that the purchasing power of consumers may be decreasing.
Historical Correlation and Implications
Historically, CBA’s wage tracker has closely correlated with the ABS’ official quarterly measure of wage growth. Given this correlation, the latest data from the CBA wage tracker points to a potentially soft result when the ABS reports the Q4 wage price index on 18 February 2026. It also indicates that wage inflation remains muted, meaning that wages are not increasing as rapidly as might be expected, especially in an inflationary environment.
Understanding the Impact
The implications of muted wage growth are significant. It can affect consumer spending, savings rates, and overall economic activity. If wages are not keeping pace with inflation, consumers may reduce their spending, which can have a broader impact on the economy.
Looking Ahead
As the economic landscape continues to evolve, tracking wage growth will remain crucial for understanding the health of the labor market and the broader economy. The upcoming ABS report will provide further insight into whether the trends observed by the CBA are part of a larger pattern.
Conclusion
In conclusion, the latest data from the CBA wage tracker suggests a deceleration in wage growth, which could have significant implications for the economy. With wage inflation remaining below the rate of CPI inflation, consumers and policymakers alike will be watching closely for signs of change in the labor market. The future of wage growth will be an important factor in shaping economic outcomes in the months to come.
