Wages growth and consumer confidence figures on Wednesday were about what could be expected from an economy neither dawdling nor racing along.

Wages growth was modest.

The wage cost index published by the Australian Bureau of Statistics (ABS) rose 3.7 per cent over the year to the June quarter.

That annual rise was exactly the same as the average for the preceding decade.

Private sector wages growth was a bit higher than the decade before, at 3.9 per cent versus 3.6 per cent.

But wages growth does not translate directly into growth in prices.

Labour productivity growth converts wages growth into slower growth in the wage costs built into a given quantity of goods and services.

And productivity growth in the sectors of the economy where it can be measured - the market sector - has, contrary to the current fashionable belief, been strong at an average growth rate of 1.4 per cent over the past five years and 5.3 per cent over the most recently measured year.

That's even including the mining sector, where productivity has been plummeting year after year since the boom began.

That means the wages figures are no threat to the two to three per cent target range for consumer price inflation adopted by the Reserve Bank of Australia (RBA) nearly 20 years ago.

But some prices are rising and having an effect on morale.

The cost of electricity, gas, water and sewerage have risen an average of 10 per cent over the past year according to the latest consumer price index data, following a 10 per cent rise in the preceding year and a 15 per cent rise the year before that.

Aside from helping to offset the deflationary effect - via lower import prices - of the high exchange rate, those big price rises for items households cannot easily do without are bound to have a negative effect on confidence.

That effect has most likely been exaggerated by successful portrayal of the carbon tax as a massive impost on the household budget, notwithstanding offsetting compensation measures and the relatively tiny size of the tax itself.

At $4 billion, the carbon tax take will amount to barely a quarter of one per cent of Australia's gross domestic product (GDP), which should come in at about $1.47 trillion in 2012/13.

Even so, it is undoubtedly a popular topic of discussion and widely perceived to be a serious threat to the world as we know it, or at least to our electricity bills.

News reports of retrenchments and the RBA's decisions in July and August not to cut interest rates further probably haven't helped either.

Whatever the reason, the Westpac/Melbourne Institute index of consumer sentiment confirmed the tepid state of household confidence with a fall to 96.6 in August from 99.1 in July.

Westpac's chief economist, Bill Evans, noted that the sub-100 result - the sixth in a row - "indicates that pessimists clearly outnumber optimists".

The mood among households is decidedly not buoyant, typical of an economy which, while not exactly sinking, is not especially buoyant either.

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