Weekly minimum wage hits $1k – will the RBA hike rates as a result?
Key takeaways
- The National Minimum Wage will rise by 6% to $1,004.90 per week.
- For the first time, the minimum annual wage based on a 38-hour week will crack $50,000.
- When low-income workers earn more, they tend to spend rather than save – which could cause inflation to rise, and the RBA to lift the cash rate again.
The Fair Work Commission has today handed down its annual wage decision, lifting minimum wages by 6% and award wages by 4.75% from July 1.
This is a pay rise for almost 3 million Australians, designed to ease cost of living pressures.
The national minimum wage will rise to:
- $26.44 an hour, or
- $1,004.90 a week, or
- $52,250 a year.
This is up from $948 a week and $24.95 an hour.
Will this cause inflation to rise – and the RBA to act?
Giving close to 3 million people a payrise could be slightly inflationary, however it's unlikely to be enough on its own to trigger an RBA rate hike.
This is because the extra money landing in some Aussies' pockets from next month will largely go toward essentials, rather than creating a spending boom.
Additionally, the inflation surge of the last few years has badly eroded real wages. So we can view this as 'catching workers up', rather than creating new inflation.
And minimum wage earners really need it: data from Finder's Consumer Sentiment Tracker (CST) shows that 79% of Aussies are stressed about their current financial situation.
This includes 24% who are"extremely" stressed.
And 55% who say they are "somewhat" stressed.
Over half of Aussies (56%) say they are living pay-cheque to pay-cheque. For this cohort, a $50 per week pre-tax wage increase makes a huge difference.
Cracking the $1,000-a-week milestone is a massive win for Australia's lowest-paid workers, and this extra cash provides some breathing room. That said, it's unlikely to spark a spending spree.
The millions of Aussies for whom this is a much-needed financial lifeline can expect to earn these wages from July 1, 2026.
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