The wages data earlier this week were a disappointment and its seen some analysts in Australia calling for a 25bp rate hike from the RBA in June.

WPAC, though (this is summary from a much longer report)

The minutes for the RBA Board meeting in May highlighted that the Board is taking a much broader approach to assessing wage pressures than just relying on the Wage Price Index. The slightly disappointing headline number from the WPI report is unlikely to sway the Board from its policy approach. We continue to argue that the best policy option for June is to go by 40 basis points early in this tightening cycle to avoid falling behind the curve.

On "broader approach to assessing wage pressures", Westpac add:

  • Some of the lead indicators of a wage price spiral are emerging – businesses confident of more pricing power- no longer limited to cost control; unions making “indexation” style wage claims; supply shocks impeding the demand control policies available to central banks; and rising inflationary expectations.