Subdued New Zealand's wage growth

Leaving the broader QES measure 2.9% higher over the past year, measure of New Zealand's wages rose 0.9% over the quarter. The wage inflation hasn't shown any material acceleration since the economy exited recession in 2011, in nominal terms. 

Over the past year, consumer price inflation has fallen to very low levels. This has meant that cost of living adjustments to wages have been limited. But it's important to put that apparent weakness in context. 

NZ's wage inflation has remained stubbornly low, and was slightly lower than expectations. The private sector LCI (including overtime) rose by 0.4% in the June quarter, to be up 1.7% for the year. 

"But softness in consumer price inflation also meant that the limited wage increases households received have actually been stretching further. Growth in real wages is expected to moderate over the coming years", says Westpac. 

Consumer price inflation is likely to lift from current very low levels. At the same time, softening GDP growth and rising unemployment will keep a lid on nominal wage growth.