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"We have wages now beating prices, nominal wages growing faster than prices, and that dynamic in our economy creates a pretty persistent flywheel," he said.

When inflation is rising faster than nominal wages, real wages are falling along with workers’ purchasing power.

Total cash earnings, or nominal wages, increased 2.5% year-on-year in May, after rising a revised 0.8% in April.

Nominal wages rose 1.9% in the last fiscal year ended in March, the fastest increase in 31 years, but inflation at 3.8%outpaced those pay gains, resulting in real wages falling 1.8% in fiscal 2022, the data showed.

Wages are still down in real terms given rapid inflation but low unemployment and growing labour scarcity, especially in services, is driving up nominal wages.