The most recent Australian Bureau of Statistics (ABS) wage price index for the December quarter of 2025 revealed that real inflation-adjusted wages declined by 0.3% in 2025 and were tracking 6% below their Covid-19 ‘bubble’ peak at roughly late 2011 levels:
The Reserve Bank of Australia’s (RBA) forecasts, laid out in its May Statement of Monetary Policy (SoMP), suggest that real wages will decline in the near term, driven by energy inflation from the Middle East, and won’t recover in the forward estimates.
Australian real wages are forecast to bottom out in the September quarter of 2026 at around March 2010 levels.
By the June quarter of 2028, the RBA forecast that Australia’s real wages would still be around 6.0% lower than their mid-2020 peak, at roughly the same level as the December quarter of 2011.
These forecasts could prove optimistic. The RBA has assumed that headline CPI inflation will peak at only 4.8% in the June quarter of 2026, based on an orderly ending of the war in the Middle East and a sharp decline in the global oil price:
If the war were to remain prolonged or intensify, spiking global oil prices, CPI inflation would be far higher than the RBA’s baseline forecast, lowering real wage growth.
Regardless, the decline in real wages is one for the history books and is unlikely to recover over the foreseeable future.
