Issue 21 2021 - Annual CPI hits 3.8% - What now?


The Australian Bureau of Statistics valued the annual Consumer Price Index risk for the year ending 30 June at 3.8%.1 What should employers be aware of?.


The ABS recently reported data and commentary on a higher than expected CPI figure. It comes as a rebound to the COVID-affected year ending June 2020. Followers will remember the annual CPI last year was negative (-0.3%).


Much of the result is due to very significant jumps in the categories of Transport (including fuel) and Furnishings, household equipment and services.


What are the industrial relations implications?


Wage claim pressures

The Reserve Bank is still lamenting continued low wage growth and has forecast this to continue as we grapple with and then exit COVID.


It is likely that employees and unions will cherry pick the CPI result to press demands for wage increases in 2021 above a level that is affordable or sustainable. We certainly saw expectations in bargaining negotiations rise when the Fair Work Commission lifted award rates by 2.5% in July 2021.


Wage adjustments enterprise agreements

Some enterprise agreements contain a mechanism to adjust wages or allowances using a CPI reference. These are enforceable and must be honoured.


If pegging wages to “cost of living” or CPI level rises seems attractive to your circumstances, this latest CPI result is a useful reminder of the potential volatility of such a measure. Very few recent enterprise agreements have negotiated wage increases of more than 2.5% per annum.


Require further information/assistance?

If you require further information or advice, please contact your Consultant.

[1] Weighted average of Eight Capital Cities, All groups.

EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.

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