“Increases in labour costs account for just 18% of the inflation above what the RBA wants to see before it eases interest rate increases.”
The Australia Institute puts 69% of excess inflation on corporate profits and 18% on wages. Businesses lifted prices $160bn a year above their costs. The Reserve Bank keeps warning about a wage-price spiral and raising rates on workers. Its governor admitted its models are “not well suited for supply shocks.” The bank is fighting the 1970s while Woolworths banks the 2020s.