This updated analysis reveals that a fair and appropriate increase to the minimum wage, and accompanying increases to award rates, would not have a significant effect on inflation in Australia. The analysis examines the correlation between minimum wage increases and inflation going back 30 years, and finds no consistent link between minimum wage increases and inflation. 

Key findings

• Even with the historically large minimum and award wage rises that occurred in 2022 and 2023, profit margins across the economy remain higher than pre-pandemic norms. 
• The impact on prices of even a substantial lift in minimum and award wages could be fully offset by a very small reduction in profits.
• A modest increase in minimum and award wages, such as the 5% proposed by the ACTU, would have minimal impact on profits and have no significant influence on future inflation. 
• Given the likely rise in the cost of living due to the supply shock of the Iran War, those on minimum and award wages need a lift in wages.