Wages rose by a higher-than-expected 3.4 per cent over the year to March, Australian Bureau of Statistics figures showed on Wednesday, driven by new public sector pay deals and care workers benefiting from a Fair Work Commission ruling.
Analysts had predicted a 3.2 per cent rise in wages over the 12 months to March.
Strong wage growth and falling inflation means workers have enjoyed real annual wages growth for 18 months in a row.
"That is a very good thing, a very pleasing, very encouraging outcome that we see in today's data," Treasurer Jim Chalmers told reporters.
Wages grew one per cent in real terms over the year, with inflation at 2.4 per cent over the same period - the strongest real rise in wages in five years.
On a quarterly basis, wages lifted 0.9 per cent in the three months to March, from a 0.7 per cent rise in December.
Despite the surprise jump, KPMG chief economist Brendan Rynne did not expect the data to deter the RBA from cutting the cash rate by 25 basis points on Tuesday.
JP Morgan economist Tom Kennedy agreed, saying wage growth was still running at levels consistent with the central bank's inflation target of two to three per cent.
Public sector wages grew at a faster rate than the private sector, rising 3.6 per cent annually, up from 2.9 per cent in December.
Private sector wage growth was unchanged at 3.3 per cent.
A ruling by the industrial umpire the Fair Work Commission to correct historical underpayment for women resulted in workers in feminised industries such as childcare receiving pay rises of 10 per cent or more.
NAB senior markets economist Taylor Nugent said the pick up in private wage growth was attributable to increases in the health and care sectors, rather than a sign wages pressures were re-accelerating.
Public sector wage growth was boosted by state-based enterprise agreements coming online, ABS head of prices statistics Michelle Marquardt said.
"Jobs covered by enterprise agreements contributed to over half of all quarterly growth, for the first time since September 2020," Ms Marquardt said.
Markets were fully pricing in the central bank to cut rates by 25 basis points at its next meeting on Tuesday.
Wednesday's labour force release will be closely watched by the RBA board, given governor Michele Bullock has expressed concern tightness in the jobs market could stop inflation falling as quickly as she would like.
Continued wage growth without an increase in productivity could flow through to higher inflation, Dr Rynne warned.
Dr Chalmers said there had been no evidence of a wage price spiral, in which unsustainable pay rises cause business costs and inflation to rise.
"We're getting wages growth at the same time as inflation is coming down," he said.
"This shows just how spectacularly wrong some people have been when they've talked about fears of a wage price spiral in our economy."
ACTU president Michele O'Neil said workers in healthcare and social assistance had benefited from the federal government's changes to workplace relations laws.
The government is due to reveal its submission to the Fair Work Commission's annual wage review by the end of the week.
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