* Q3 wage price index +0.5 pct q/q, 2.2 pct y/y miss forecasts
* Rise in minimum wage fails to lift overall growth as hoped
* Consumer sentiment slips 1.7 pct, curbs Xmas gift plans
* A$ hits four-month low as market pushes out rate hike (Adds analyst reaction)
By Wayne Cole
SYDNEY, Nov 15 (Reuters) - Australian wages rose by less than expected last quarter with even a mandated jump in the minimum wage failing to lift pay awards across the economy, a miserly outcome that threatens to further sap consumer spending and inflation.
The Aussie dollar instantly slid a third of a U.S. cent to a four-month low at $0.7580 AUD=D4 and bond yields fell as investors pushed out the probability of a rate hike to 2019.
"There is little to suggest wages growth will pick up much in 2018 and into 2019," said Su-Lin Ong, head of Australian economics at RBC Capital Markets.
"That hints at downside risk to inflation and we stick to the view rates will remain at 1.5 percent for all of next year."
Wednesday's figures from the Australian Bureau of Statistics showed its wage price index rose 0.5 percent in the third quarter, from the second quarter, missing market forecasts of a 0.7 percent increase.
Annual wage growth quickened to 2.0 percent, from a record low of 1.9 percent, but again was short of the 2.2 percent forecasted and only just above inflation at 1.8 percent.
And that tiny pick-up owed much to a relatively generous 3.3 percent hike in the minimum wage which was forced on reluctant employers by the government regulator.
Annual wage growth in the private sector was 1.9 percent with not a single industry paying over 3 percent. The best outcomes came in healthcare and recreation, with mining a shadow of its former boom heights at 1.2 percent.
The scrooge-like pace of wage rises is a major reason the Reserve Bank of Australia (RBA) recently forecast core inflation would not reach the floor of its 2 to 3 percent target band until early 2019, a year later than previously hoped.
The central bank sounded especially concerned that even the most broad measure of average earnings growth contained in gross domestic product had actually turned negative, easily the weakest readings since the mid-1960s.
As a result household incomes have been lagging debt, sapping spending power and slugging the retail sector where sales suffered a rare contraction in the third quarter.
LOW WAGE WORLD
Consumers remained cautious with a Westpac survey out on Wednesday showing pessimists again outnumbered optimists in November as its sentiment index dropped 1.7 percent. S9N1LO015
Even Christmas cheer was lacking with only 11 percent of respondents planning to spend more on seasonal gifts, the lowest share since 2009.
The problem is hardly confined to Australia with much of the rich world stuck in a low wage spiral.
Reasons cited include globalisation, the rise of the gig economy and the long decline of unions as industrial relations reform gave ever more power to employers over workers.
Businesses seem to be doing well enough out of it. A well regarded survey of firms from NAB out on Tuesday showed profits spiking to their highest in two decades even as labour costs grew well below their long-run average.
The conservative government of Prime Minister Malcolm Turnbull has proposed addressing the wages problem by slashing corporate taxes, apparently in the hope firms would pass on some of the cash to workers.
However, the history of such cuts across the developed world shows the vast bulk of the money goes to share buy backs and dividends, boosting management bonuses in the process.