With a federal election looming, let's get some facts ready.

Are wages growing?

What's inflation doing?

Is the cost of living rising?

Wages growth has picked up a little

Wages grew by 2.3 per cent over the 12 months to December, according to the Bureau of Statistics.

That is historically weak.

Between 1998 and 2015, nominal wages always grew by 2.5 per cent or more a year.

However, for the past seven years, they've failed to grow faster than 2.5 per cent.

In fact, they've repeatedly broken records for how slowly they've been growing.

By returning to 2.3 per cent at the end of last year, wages growth has now returned to the weak levels seen in the years leading up to the pandemic.

The Reserve Bank governor, Philip Lowe, says wages need to grow at 3 per cent or more to make meaningful improvements in people's lives.

Why?

Because of inflation.

But 'real' wages are declining

When we talk about wages growth, we need to take inflation into account.

If inflation is growing faster than your wages, it means you won't be able to buy the same basket of goods with the same amount of money. You'll need some more money just to stop slipping backwards.

And that's happening to you now.

As you can see from the graph below, inflation is growing much faster than wages.

That's been occurring for the past nine months.

It means your "real" wages have gone backwards because the purchasing power of your pay packet has been deteriorating.

It's a sign your cost of living could be rising.

Cost of living increases?

Politicians understand when real wages decline it can hurt them at the ballot box.

It's why Treasurer Josh Frydenberg reminded his Twitter followers yesterday that when the Labor Party lost power federally in September 2013, real wages "were falling".

Loading

Could he back that up?

Well, on a quarter-by-quarter basis, real wages did decline in the September quarter of 2013, which is the quarter in which the federal election was held.

However, in the previous nine months, real wages were increasing.

See the graph below.

What does Mr Frydenberg's own record look like for the time since the last federal election in 2019?

Well, on a quarter-by-quarter basis, real wages have declined for 15 of the past 18 months under his watch.

See the graph below.

Mr Frydenberg said cost of living pressures were real and that's why the government was insisting on delivering income tax cuts.

Economist Callam Pickering, from the job search company Indeed, emphasised that point about cost-of-living pressures.

He said last year's real-wage performance was the worst Australia had seen in more than seven years.

Loading

What do economists say?

Some economists were expecting wages growth to pick up more in the December quarter.

They say annual wages growth of 2.3 per cent is still quite weak.

However, there's an expectation wages will rise again from here.

Commonwealth Bank economist Gareth Aird said ABS officials collected the most recent wage data between August 21 and November 21 last year.

At that point, the national unemployment rate averaged 4.7 per cent over the three months to August 21, and it averaged a slightly higher 4.8 per cent in the three months to November 21.

Mr Aird said that meant the national labour market didn't actually "tighten" between the third and fourth-quarter wage surveys.

In fact, the unemployment rate only fell from 4.6 per cent to 4.2 per cent in December, which was the month after the wage survey was taken.

So, that's a sign the next quarterly wage data, which is due on May 18, could record more wage increases, he said.