The Wage Price Index measures the price of labour — specifically, what employers pay for an equivalent unit of work over time. It strips out changes in hours worked and bonuses, making it the cleanest measure of whether wage rates themselves are rising faster or slower than prices.
Since June 2019, wages are up 20.6%. The overall cost of living is up 25.9%. That 5.3 percentage point gap means that $1,000 of goods and services that cost $1,000 in 2019 now costs $1,259, but the typical worker's wage only buys $1,206 worth of those goods. In real terms, the average Australian worker has lost approximately 4.2 cents in the dollar of purchasing power since the pandemic.
The minimum wage picture is different. The Fair Work Commission has increased the minimum wage by 28.1% since 2019 — outpacing both WPI and CPI. Workers on the minimum wage have seen their real incomes improve. The squeeze is concentrated in the middle: award and above-award employees whose wages have grown at the average WPI rate while facing the same cost increases as everyone else.
Wages vs each cost category
Where the gap is widestThe WPI aggregate masks significant variation across spending categories. Energy, insurance and housing costs have grown far faster than wages. Transport and health are closer to wage growth. Telecommunications, after years of deflation, has now turned positive.
ABS Wage Price Index 6345.0 and ABS CPI 6401.0. All indexed to June 2019 = 0% change.
Real impact by income level
What the gap means in dollarsThe purchasing power loss is proportionally the same across income levels — but the dollar impact is larger at higher incomes. These estimates assume each household's spending pattern roughly reflects the average ABS basket weights.
| Annual income | 2019 cost of living (est.) | 2026 cost of living (est.) | Wages now buy | Annual shortfall |
|---|
Rate rises compound the wages gap. The RBA has raised the cash rate by a net 400 basis points since May 2022 — from 0.10% to 4.10%. For the 32% of Australian households with a mortgage, this represents a direct, immediate reduction in discretionary income that is not captured in the wages vs CPI comparison. A household with a $600,000 mortgage is paying approximately $1,840 more per month than in May 2022 — equivalent to a 15–20% effective pay cut for a median income earner, on top of the underlying cost of living increase.
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