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No relief for workers as inflation keeps pace with wages

The cost of consumer goods rose by 2.1 per cent over the year.

The cost of consumer goods rose by 2.1 per cent over the year. Photo: Getty

The cost of consumer goods and services has increased 2.1 per cent in the past year, exactly at the same rate as wages have risen, new figures Australian Bureau of Statistics reveal.

That means real wages are not rising at all, meaning Australia’s long spell of wage stagnation looks set to continue.

The cost of transport, health, alcohol and tobacco skyrocketed in the 12 months to June, the ABS consumer price index revealed on Wednesday.

The cost of housing was also well above wages, at 3.1 per cent.

However, the cost of food, clothing and financial services all grew at a much slower rate than wages, meaning they got cheaper in real terms for the average household.

A standout improvement was the cost of “communication”, which fell by a massive 4.2 per cent.

The ABS put this down to the fierce competition in the mobile market, which has led telecommunication companies to aggressively lower the cost of mobile plans.

The cost of clothing and footwear fell by 2 per cent, the cost of food and non-alcoholic drinks rose by 0.3 per cent, and the cost of financial services and insurance rose by 1.5 per cent.

The cost of domestic travel fell by 2.7 per cent, the cost of motor vehicles fell by 2 per cent, and the cost of vegetables 2.9 per cent.

The biggest single rise was in alcohol and tobacco, which went up 7.8 per cent as a result of government taxes.

Transport was the second biggest increase, at 5.2 per cent. The ABS put this down to the rise in the cost of petrol.

The cost of health rose by 3.4 per cent, thanks to the recent hikes in the cost of health insurance.

CPI varied across Australia, with Adelaide showing the biggest increase in prices (2.7 per cent) and Perth the smallest (1.1 per cent). The graphic below shows the figure for each capital city.

Unions call for action on wages

The Australian Council of Trade Unions, the collective voice of the Australian union movement, seized on the figures as evidence action must be taken to lift real wages.

“Real wage growth is now zero,” ACTU secretary Sally McManus said.

“The system is failing working people who desperately need a pay rise to be able to afford to support themselves and their families.

“Working people in Australia should not be struggling to pay for transport, or healthcare, or to put food on their table. Australians need a pay rise.

“When the system is out of balance and big business has too much power, this is what happens. Balance needs to be restored so working people can win the pay rises they deserve.”

In April, the ACTU called for an end to enterprise-only bargaining rules, a legacy of the Hawke-Keating Labor government.

This would allow employees of different companies to join forces to bargain for pay rises across an industry, something the ACTU believes would give workers more power to negotiate higher wages.

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