There are growing expectations of an interest rate hike to 4.1 per cent on Tuesday amid a solid lift in labour costs and evidence of ongoing resilience in the economy.
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The wages bill for employers climbed 1.8 per cent in the March quarter while company profits and sales volumes both grew 0.5 per cent, adding to evidence that economic activity is holding up despite the pressure from 11 rates hikes in the past year.
Ahead of the release of official growth figures on Wednesday, Australian Bureau of Statistics analysis of business performance suggests that although there was some softening of conditions early this year, the economy has sustained some momentum.
The Reserve Bank is likely to pay particular attention to the increase in the salary bill of employers after governor Philip Lowe warned last week rising unit labour costs could add to inflation without offsetting productivity gains.
A day after Dr Lowe's remarks, the monthly consumer price index was released showing inflation jumped an unexpected 6.8 per cent in April, up from 6.3 per cent the previous month.
The outcome dented hopes that 3.85 per cent would be the high point for the current run of interest rate increases.
Australian National University's RBA Shadow Board thinks the central bank will need to tighten monetary policy by 0.25 of a percentage point on Tuesday in order to bring inflation down.
And Deutsche Bank chief economist Phil O'Donaghoe predicts the official cash rate will eventually have to reach 4.6 per cent by September.
While the monthly CPI increase was affected by one-off and volatile factors, including a change in the fuel excise tax in April 2022, economists warned the result suggested price pressures were uncomfortably persistent.
But Treasurer Jim Chalmers said he remains confident inflation has peaked, despite the April rebound.
Dr Chalmers told ABC radio the monthly CPI "is volatile and bounces around. It's really clear that inflation peaked in our economy around Christmas time and it's been moderating since".
But he admitted inflation was proving to be "more persistent than we want it to be".
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Mr O'Donaghoe said household spending was more resilient than he had expected in the face of a succession of interest rate hikes, supported by a "stunning turnaround" in house prices and low unemployment.
He added that last week's increase in the minimum wage created "material upside risks to wage growth".
But Dr Chalmers dismissed concerns the 5.75 per cent lift in the minimum wage awarded by the Fair Work Commission last Friday would make inflation worse.
"Our inflation problem is not because the lowest paid workers are getting paid too much. It's not because of the budget. Our inflation challenge ... is because of a war in Ukraine and busted supply chains and a decade of neglect and all of these other issues that the government is working to address," he said.
RBA Shadow Board chair Timo Henckel agreed that "so far" wages were not adding to inflation.
But Dr Henckel said the economy was proving to be resilient in the face of higher interest rates.
"Considering consumer and business indicators together, it looks as though the Australian economy may be softening, but only slightly, despite the recent extended string of interest rate hikes," he said.
The ANU economist said the impact of the recent federal budget on inflation was "broadly neutral".
But Dr Henckel said the world economy remained a major source of uncertainty, citing a recent World Economic Forum survey of leading economist in which almost half thought a global recession was likely because of inflation, high energy prices, disrupted supply chains, geopolitical risks, trade fragmentation and financial stress.
The RBA Shadow Board offers little hope for borrowers struggling with higher interest rates, given that it expects the official cash rate to still be at 4.1 per cent in six months and is virtually split on whether it will be above or below 3.85 per cent this time next year.