Northern Tasmanian businesses warn of inflation risk

The Fair Work Commission on Wednesday moved to lift the national minimum wage to $21.38 per hour, while workers on award rates will see a 4.6 per cent increase, with a minimum $40 per week increase.

Launceston Chamber of Commerce executive officer Will Cassidy said the increase was "higher than expected", and comes at the same time as the half-per cent lift in the Superannuation Guarantee from July 1.

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"It's definitely the biggest wages increase we've seen in the past few years - it is good for those people that are struggling, but on the other hand, it is risking inflation, which is probably the worst thing for the economy," he said.

The decision by the Fair Work Commission comes into effect from July 1, and applies to those employees being paid minimum wage, as well as to those covered by enterprise bargaining agreements.

Employees on awards will see wages increased by 4.6 per cent or a minimum of $40 per week on a full-time basis.

For a worker earning $1000 per week plus $100 in superannuation, the total cost should rise by about $63, including the lift to super.

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Commission president Iain Ross said soaring inflation was the main basis of the decision - he said he expected inflation to peak at about 6 per cent this year.

According to the latest figures, consumer prices increased by 5.1 per cent in the year to the end of April - the highest rate of inflation in years.

Some Launceston business owners were concerned that the wage increase could further stoke inflation.

"If you are trying to keep inflation under control, I'm not sure it was the best thing to do right now," Eski Group chief executive Karen Burbury said. Eski Group is the holding company of Launceston restaurants Rupert & Hound and Cataract on Paterson.

"But in saying that, we did need to have a wage increase because the pressure on people is significant right now, with fuel, food prices going up," she said.

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"It's a double-edged sword - damned if we do, and damned if we don't."

She also pointed out that labour shortages are still a major problem for her business.

"We have had to cut back trading at the Rupert & Hound by two days simply because of staff shortages - trained staff. You can't make people work."

Mr Cassidy also pointed out that rising input costs, such as food, materials and fuel, are simultaneously slugging businesses in Northern Tasmania.

"This wage rise will increase costs for businesses in sectors that are already facing cost increases in raw materials and ingredients and supplies," he said.

Other business owners were less concerned about an inflation spiral.

Bread and Butter Cafe co-owner Olivia Morrison said she wasn't concerned about inflation and "wholeheartedly" supported the wage increase.

"I'm not concerned about inflation - we see the inflation directly because we are buying food for our businesses, and I can only imagine how rising prices affects families," she said.

Her workers are already paid above the minimum wage, but she intends to review wages often.

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