A key national wages measure, the Wage Cost Index compiled by the Bureau of Statistics, dropped to 2.1 per cent in the year to March, the lowest mark in the survey's 19-year history.

The weakness was broad-based, affecting all industry sectors and states, although the slowdown has been especially acute in the mining sector as it wrestles with a long, post-boom adjustment.

Annual wages growth in the construction sector was also well below the national average at 1.6 per cent.

Wages are the biggest component of household incomes so weak growth is a constraint on consumer spending power. Shoppers do have one consolation – latest inflation figures show prices across the economy grew at an even slower rate than wages over the past year (1.3 per cent).

But that combination of very low inflation and very weak wages growth is worrying economists. In the past, periods of very high inflation have caused economic damage but now there are fears about the economic consequences should wages and prices stagnate, or start falling.

"Central banks around the world are now having problems with inflation being too low," ANZ economist Felicity Emmett said.

The Reserve Bank of Australia pointed to the "unexpectedly low" inflation rate when it delivered a surprise interest rate cut earlier this month. The Reserve has since slashed its inflation forecasts but, following Wednesday's wages data, Ms Emmett said "the risks to the inflation outlook remain tilted to the downside."

The anemic wages growth figures have increased the chances the Reserve Bank will take further action. That raises the prospect of a controversial mid-election campaign interest rate cut after the bank's next board meeting on June 7.

Weak wages growth also threatens forecasts made by Treasurer Scott Morrison in his first budget delivered only a fortnight ago. It predicted wages growth of 2.25 per cent this financial year, rising to 2.5 per cent in 2016-17. But the latest data casts doubt on whether those modest forecasts can be achieved.

Weaker than expected wages growth will reduce outlays a little because welfare payments linked to wages growth – including the aged pension – are lower. But that will be more than offset by the substantial hit that weak wages growth will make to a key federal revenue source: income tax.

The mandatory pre-election budget update – the Pre-election Economic and Fiscal Outlook (PEFO) – could cut billions from the budget bottom line when it is released on Friday because of a drop in the iron ore price during the past fortnight.

It may be too late for Wednesday's weak wages figures to be factored into the update. But if they are, the federal deficit would probably be even larger.