Wages growth in Australia has been sluggish for years, well before the coronavirus pandemic hit the economy.

In a Facebook post, Federal Labor claimed that "under Scott Morrison real wages have fallen 2.1 per cent in 12 months, the fastest drop in wages in 20 years".

Real wages — that is, wages adjusted for inflation — were 2.1 per cent lower in the June quarter of 2021 compared to the June quarter of 2020, when calculated using headline figures for the consumer price index and the wage price index, both published by the Australian Bureau of Statistics (ABS).

This was indeed the sharpest annual fall recorded since June 2001, when real wages plunged 2.3 per cent following the introduction of the GST.

However, the steep decline in real wages over the year reflected the inflationary effect of two unusually large and temporary price increases, both reversing sharp declines a year earlier.

First, the cost of childcare returned to normal levels after a key pandemic response introduced in the June quarter of 2020 — free childcare — ended.

Second, fuel prices roared back from a record pandemic-induced drop that likewise occurred in the June quarter of 2020.

These two large and one-off price movements were significant enough to prompt the ABS to suggest that "underlying" measures of inflation should be considered as an alternative to the headline rate.

In particular, the bureau highlighted its "trimmed mean" inflation estimate, which slices abnormally large price changes from its calculations.

When this measure of inflation is applied, real wages in fact increased very slightly over the full year.

While still pointing to sluggish real wages growth, by this measure the annual decline was much less dire than the headline inflation figure — or the Labor Party's Instagram post — would suggest.

Verdict: Labor's claim is not the full story.