Living standards will be starting to decline for many Tasmanian workers, with inflation shooting ahead of wages growth.
Hobart inflation - the best available measure for Tasmania - increased by 0.6 per cent in the September quarter and 2.7 per cent annually, the Australian Bureau of Statistics estimated.
The annual inflation rate was the highest of any capital city.
National inflation increased by 1.9 per cent.
Hobart’s quarterly inflation rate was the equal highest in the nation, with three other capitals.
The 2.7 per cent annual inflation rate was well ahead of annual Tasmanian wages growth to the end of June.
The Tasmanian wage price index - which measures changes in payments for the same work - increased by 2.3 per cent annually and by just 0.3 per cent during the June quarter.
Shadow Treasurer Scott Bacon said cost of living pressures were hitting Tasmanians hard.
“Wages need to keep up with cost of living pressures,” Mr Bacon said.
In the year to June, the Tasmanian wage price index increased by 2.3 per cent for private sector workers and 2.4 per cent for public sector workers.
The state government is fighting public sector unions over its 2 per cent annual wage increase cap.
Unions argue the figure should be 3 per cent or more.
Mr Bacon said Tasmanian Treasurer Peter Gutwein’s wages policy was politically motivated and unfair to Tasmanian workers.
“Tasmanian workers earn $10,000 a year less than workers on the mainland,” Mr Bacon said.
“Mr Gutwein should scrap the cap and respectfully bargain in good faith with his workforce.
“Nurses, teachers, firefighters and other hard working public workers are some of the lowest paid in the country.
“Their cost of living is increasing and wages need to at least match those increases.”
Mr Gutwein said Tasmania’s “excellent, dedicated and professional” public sector deserved a pay rise.
He said the offer of 6 per cent over three years was fair, reasonable, affordable and sustainable.
He said inflation had averaged 1.7 per cent a year since the government was elected, less than the 2 per cent wage rises.
“Over time it is clear that our wages policy is comfortably meeting cost of living increases in Tasmania,” he said.
“In reality, many state service employees will continue to receive pay rises in excess of 2 per cent, as they also enjoy annual increment movements for each year of service.
“The unions have called for a wage increase of 3 per cent.
“If this was provided to all public sector workers, it would cost Tasmania $285 million over four years.
“That’s $285 million less available to invest in employing more teachers, nurses and doctors.”
Hobart’s steep growth in house prices was reflected in the inflation figures, with a 4 per cent annual increase in housing costs, compared to 1.6 per cent nationally.
Other significant cost increases involved alcohol and tobacco (6.7 per cent) and transport (6.1 per cent).
Health costs increased by 3.5 per cent.
Other increases came in:
- Recreation and culture, 2.8 per cent;
- education, 2.2 per cent;
- food, 1.3 per cent; and
- clothing and footwear, 1.1 per cent.
The increases were partly offset by falling costs for some items, headlined by a 4.5 per cent decrease in communications costs.
Other areas where costs fell were:
- Furnishings, household equipment and services, 1.2 per cent;, and
- insurance and financial services, 0.6 per cent.
National inflation increased by 0.4 per cent in the September quarter.
The annual rate of 1.9 per cent was slightly below the Reserve Bank’s inflation target band of 2-3 per cent, meaning it would not be a factor supportive of interest rate hikes.
September quarter national cost increases included 4.3 per cent for international travel and accommodation.