Today's December quarter wage price index - the pre-eminent series of underlying nominal wage costs for Australia - rose a stronger than expected 1.0% (quarterly)/3.6% (annual), after +0.7%/3.6% in the September quarter and the strongest quarterly growth for a year. The outcome was above our own pick (a more benign 0.6%/3.2%) and the market consensus (0.8%/3.4%).

Private sector wages set the pace, despite evidence of some softening in the labour market through the middle and latter parts of last year. Private wages grew by 0.9%/3.8%, virtually unchanged from 0.9%/3.7% in Quarter 3, when growth would have been boosted by the 3.4% lift in the National Minimum Wage from 1 July, an increase of $19.40 to $589.30 to $15.51/ hour. It's conceivable of course that this latest quarter's growth had some spillover from the National Minimum Wage increase.

Government wages rose by 0.8%/3.2% in Quarter 4 after 0.5%/3.3%.

In terms of the dispersion of industry growth, the fastest industry growth in wages was a 4.7% annual increase for the professional, scientific and technical services industry, no doubt boosted from resource development activity. At the other end of the scale, core government wage rises overall were more muted with the public administration and safety sector wages up 2.9%.

On the state/regional front, interestingly there is not quite the dispersion that you might expect given the breakneck speed of resource development against some more struggling sectors with a heavier weighting on the Eastern seaboard. Western Australian wages grew 3.9% through last year, not far above the national average of 3.7% and barely different from New South Wales (3.8%), Victoria (3.6%), Queensland (3.6%), Tasmania (3.6%) but above South Australia (3.3%) and Canberra (2.9%). It's in the Territory where there is even more pressure with wages growing at a 4.2% annual rate.

All in all, and even allowing for some conceivable spillover from the National Minimum Wage increase in Quarter 4, this piece of data has not added to the Reserve Bank of Australia's (RBA's) inflationary comfort meter. If anything, it's a sign and reminder that Australia's labour market remains tight with continued growth of nominal wages in excess of the headline inflation last year when consumer price index was temporarily boosted by a combination of banana prices, cyclones and floods.

The data are not alarming for the RBA, but neither do they provide more comfort that inflation is on the way down. For now we would add this data set to the list of those indicators and events arguing for a cautious and steady hand from the RBA, at least for now pending developments in the months ahead.

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