Prices are still rising faster than pay, but the gap is narrowing.
Published 28 May 2026
Two of the most important numbers for any working household are how fast prices are rising and how fast pay is rising. When prices win that race, your money buys less each year even if your salary is bigger. The latest ABS figures let us put the two side by side, and the picture is one of slow improvement rather than relief: real wages are still going backwards, but by less than they were.
The ABS Consumer Price Index rose 4.2% in the 12 months to April 2026, an easing from the 4.6% recorded in the year to March. On the pay side, the ABS Wage Price Index rose 3.3% over the year to the March 2026 quarter. Put the two together and wages grew about 0.9 percentage points slower than prices, which means real wages, pay adjusted for inflation, were still falling.
| Indicator | Latest annual figure | Period |
|---|---|---|
| Wage Price Index | 3.3% | Year to March 2026 quarter |
| Consumer Price Index | 4.2% | Year to April 2026 |
| Approximate real wage change | About -0.9 percentage points | Latest comparison |
Earlier in the year the gap was wider. When inflation was running at 4.6% against the same 3.3% wage growth, real wages were falling by around 1.3 percentage points. With inflation now at 4.2%, the gap has shrunk to about 0.9 points. The improvement is coming mostly from the prices side as inflation slows, rather than from a jump in wage growth. That distinction matters: a sustainable recovery in living standards usually needs wage growth to hold up while inflation keeps falling, so that pay eventually rises faster than prices.
The headline numbers describe the economy as a whole, but the maths works the same way for your own pay. If your salary rose by less than 4.2% over the past year, your real income has fallen. If it rose by more, you have gained a little ground. Because tax takes a share of any pay rise, it is worth comparing after-tax amounts rather than headline percentages. Our salary calculator can help you see how a gross pay change flows through to your take-home pay, which is the figure that actually competes with the supermarket and the mortgage.
Disclaimer: This article summarises data published by the Australian Bureau of Statistics and is general information, not financial advice. Figures are drawn from the ABS Wage Price Index, Australia and Consumer Price Index, Australia releases. For advice on your own circumstances, consult a qualified professional.