Gains in compensation per hour picked up over the past year or so, responding to a long period of  2  BIS Review 66/2001  tight labor markets, the earlier acceleration of productivity, and the effects of an energy-induced run-up in consumer prices.
Within the RBA, the staff run a number of standard “workhorse” models based on historical relationships to help explain and forecast inflation.2 While these models are all consistent with a pick-up, and then moderation, in inflation, they have difficulty explaining the amplitude of the recent cycle.