But the general inflation psychology appears to be shifting; it is easier for firms to put their prices up and the public is more accepting of this. Wages growth has also picked from the very low rates of recent years and a further increase is expected due to the very tight labour market.
Stronger wages growth is something that the RBA had been seeking for a number of years and some pick-up is welcome. It is also important to note that, to date, the stronger growth in wages has not been a major factor driving inflation higher and, at the aggregate level, growth in labour costs remains consistent with inflation returning to target.