Fresh data from the Australian Bureau of Statistics on Wednesday revealed wages rose by 4.2 per cent over the year to December.

The result, up 0.9 per cent in the final quarter of the year, contributed to the highest annual growth since March 2009.

Wage growth is now outpacing the inflation rate, which hit 4.1 per cent through the end of 2023.

ABS head of prices statistics Michelle Marquard said the increase was driven by organisational-wide annual wage and salary reviews across both the public and private sector.

“Wage growth for December quarter 2023 saw a higher contribution from jobs covered by enterprise agreements than is typically recorded for a December quarter,” she said.

“Higher growth in the public sector was primarily due to newly implemented enterprise agreements for essential workers in the health care and social assistance and education and training industries following changes to state-based wages policies.”

Employees in the public sector were the biggest winner, securing their highest quarterly rise in 15 years at 1.3 per cent, and 4.3 per cent over the past year.

Meanwhile, annual wage growth in the private sector slowed to 4.2 per cent from 4.3 per cent.

Head of macroeconomic forecasting for Oxford Economics Australia Sean Langcake credited the difference to a “larger-than-usual” share of public sector jobs experiencing a wage reset.

The industries with the largest contribution to quarterly wage growth were health care and social assistance (1.3 per cent) and education and training (1.7 per cent).

The finance and insurance services industry had the lowest growth in wages.

Mr Langcake said while the jobs market is showing signs of slackening there was still “a good deal of catch up growth to come through the wage-setting system”.

“The labour market still remains in a tight position. We expect wage price index growth will remain around the quarter on quarter pace of 0.8-0.9 per cent through 2024,” he said.

Treasurer Jim Chalmers described the figures as “very encouraging news” that pointed to real wages growth returning ahead of schedule.

“These are very welcome and very encouraging numbers but we know people are still under pressure, which is why our cost of living tax cuts are so important,” he said.

“This is the first time since 2018 we’ve seen three consecutive quarters of real wages growth.

“It means real wages growth returned faster than forecast by Treasury, at the end of 2023 rather than the beginning 2024.”

The monthly inflation indicator is due next Wednesday.