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Wage Growth is Cooling in Australia – What It Means for 2026

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Wage Growth is Cooling in Australia – What It Means for 2026

Australia’s economy continues to show signs of gradual cooling, with the latest Commonwealth Bank Wage and Labour Insights (December 2025) confirming that wage and employment growth have softened slightly, but remain resilient overall.

This trend aligns closely with recent inflation data. As we discussed in our article on the November 2025 CPI showing inflation easing pressure on the RBA, price growth is moderating, and wage data now supports that broader economic picture.

Wages Growth Softens, but Remains Elevated

According to CommBank’s analysis, wages grew by 0.8% in the December quarter, unchanged from November. However, annual wage growth eased to 3.1%, down from 3.2%. However, wage growth varied significantly across Australia:

  • Western Australia and the ACT: fastest growth at 3.6%
  • South Australia & Tasmania: 3.4%
  • NSW & Queensland: 3.2%
  • Victoria: 3.0%
  • Northern Territory: slowest at 2.5%

Victoria’s softer outcome reinforces why regional insights matter. Working with a trusted accountant Box Hill ensures your financial decisions reflect local economic conditions, not just national averages.

Employment Growth is Slowing

The CBA Labour Insights also show that around 23,000 jobs were added in December, a slight slowdown compared to previous years. Unemployment remains low at approximately 4.3%, indicating the labour market is still tight, though easing.

What This Means for Interest Rates and Planning

With wages and inflation both moderating, pressure on the Reserve Bank is easing, but not disappearing. CBA is still forecasting that the RBA will lift the cash rate as early as February.

Nevertheless, interest rates are very likely to remain higher for longer, making forward planning essential.

Practical steps to consider:

  • Review wage and staffing budgets for 2026
  • Stress-test cash flow against interest rate changes
  • Plan tax strategies early to preserve margins and savings

Final Thoughts

Australia’s economy is cooling in a controlled way, not sharply slowing. Wage growth, employment data, and CPI figures all point to a more stable outlook for 2026.

If you want tailored advice on how these trends affect your business, income, or tax position, speak with Infinity Solution Tax Plus, your local accounting experts in Box Hill.

Disclaimer: This article contains general information only and does not constitute financial or taxation advice. You should seek personalised advice from a registered tax or financial professional.

Sienna Jiang is the Founder and Managing Director of Infinity Solution Tax Plus, a Chartered Accounting firm dedicated to helping clients stay financially organised while achieving their business, financial, and personal goals.

A Certified Public Accountant (CPA) with over 10 years of experience in accounting and taxation, Sienna brings broad and in-depth expertise in tax compliance, business advisory, financial reporting, and strategic tax planning for individuals and small businesses — including significant experience working with professionals in the medical field.

She works closely with clients to deliver tailored solutions in tax structuring, business strategy, and long-term planning. Her holistic approach combines practical guidance with personalised support, helping clients simplify compliance, drive growth, and reach their goals with confidence.

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