Workers set to take a real pay cut of 1.5% as inflation surges, RBA boss warns

Philip Lowe says a real wage cut of 1.5% needs to be balanced against $250bn in savings banked by households during the pandemic. Photograph: Lisa Maree Williams/Getty Images

The governor of the Reserve Bank of Australia, Philip Lowe, has warned Australians they are set to take a real pay cut of 1.5% this year because sluggish wages growth won’t meet a surge in inflation.

Lowe said he was hopeful the inflation spike was a one-off caused by supply chain disruption and soaring oil prices due to Russia invading Ukraine, but there were signs that business operators were increasingly willing to jack up prices.