Moderate wage increases in Australia's states have temporarily eased the pressure on planned interest rate adjustment by the Reserve Bank of Australia (RBA) next month.

Australian wages growth slowed unexpectedly in the first quarter of 2011, the Australian Bureau of Statistics (ABS) said Wednesday. Records by the government statistics office said wages, excluding bonuses, rose a seasonally adjusted 0.8 percent in the opening three months of the year from the fourth quarter of 2010, and rose 3.8 percent from a year earlier.

The data defied an earlier forecast of economists, who expected a rise of 1.1 percent for the period.

Private sector wages rose 0.9 percent in the first quarter and public sector wages rose 0.8 percent, the ABS said.

The RBA said in its earlier notes that the acceleration in wages due to the mining boom can intensify inflation pressures. Thus, the RBA warned that another rate adjustment upwards could be possible to strike a balance in the Australian economy.

Moderate wage increases followed news earlier Wednesday that consumer sentiment fell in May from April by 1.3 percent, adding to evidence that spending is likely to remain tight among consumers.

"This is a modest adjustment to the index but the result is still sending a subdued message about the state of the consumer today," said Westpac chief economist Bill Evans at a press briefing today.