The RBA governor said wage rises and weak productivity growth also posed a risk to getting inflation right back down to the 2-3 per cent target range.
Over the past year those unit labour costs had increased about 7.5 per cent, Mr Lowe said, one of the largest annual increases in decades, although they fell during the pandemic and were generally weak in the decade after the global financial crisis of 2008. "The best way to achieve a moderation in growth in unit labour costs is through stronger productivity growth, which would also underpin durable increases in real wages and our national wealth and make more resources available to fund the public services that people value.
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