The start of 2026 has marked a return to rising inflation. A detailed examination of data from the Reserve Bank of Australia (RBA) and Australia’s National Accounts reveals that wage growth is not responsible for the recent uptick in inflation. It concludes that the RBA’s latest interest rate hike not only fails to address the much bigger driver of inflation – surging company profits – but it blames the wrong culprit. 

This briefing note finds that the RBA’s own figures and forecasts show that wage growth has not caused, nor are they expected to drive, the current increased levels of inflation. Furthermore, forecasts in the RBA's February Statement of Monetary Policy suggest that the impact of wages on inflation will actually fall over the next year, while inflation keeps rising.

Workers are being hit with higher interest rates in order to reduce wages despite, once again, workers and their wages not being the cause of rising inflation. The end result is that young home buyers are being lumped with the burden of bringing inflation down.