RBA concerned about 'flow-on' effects from 'inflationary' minimum wage increase

The Motley Fool Chief Investment Officer Scott Phillips says the minimum wage increase runs the risk of driving inflation. It comes as the Fair Work Commission increased the minimum wage by 3.75 per cent. “There is though, the risk that it does become inflation in two ways,” Mr Phillips told Sky News Australia. “Firstly, it simply adds more demand to the given level of supply. “Secondly, it may become … a pattern bargaining of sorts. “It will be inflationary, it must be … but it’s the flow-on effects the RBA’s most concerned about.”