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Annual wage growth has slipped to its slowest rate in more than a year and is increasingly distant from Reserve Bank and federal Treasury forecasts.Credit:Gabriele Charotte

Private sector wages grew by 0.5 per cent in the quarter,the third successive quarter at that rate. Annual growth is now at 2.1 per cent.

Public sector wages lifted by 0.5 per cent in the quarter for annual growth of 2.5 per cent.

ABS chief economist Bruce Hockman said while wages growth had slowed it was still ahead of price increases.

"The rate of annual wage growth eased slightly in September after being stable over the past year,continuing to grow at a slightly faster rate than consumer prices over the past year,"he said.

"The largest contribution to wage growth over the quarter was jobs in the health care and social assistance industry."

Wages in health care,which has enjoyed some of the strongest jobs growth in the country,are the only ones lifting at more than 3 per cent. Several sectors,including retail and manufacturing,are experiencing wage growth below 2 per cent.

Last week,the Reserve Bank downgraded its wage growth forecasts over the next two years,tipping them to stay around 2.3 per cent.

Treasury's forecasts,which underpin the budget,are much more bullish. It expects wages growth to lift to 3.25 per cent next financial year and to 3.5 per cent the year after.

The annual rate was affected by this year's minimum wage case. Low income earners were awarded a 3 per cent lift in wages by the Fair Work Commission,a drop on the 3.5 per cent they received last year.

Wages growth remains strongest in Victoria where over the past year they have grown by 2.8 per cent. The slowest growth is in Western Australia where they have lifted by 1.6 per cent over the year.

The Reserve Bank,which has openly admitted it wants wages growth above 3 per cent,has urged all governments to lift caps on public sector wages to help lift overall incomes. WA's public sector wages growth is the slowest in the country at 1.1 per cent.

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