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 Australia's industrial relations tribunal has granted a 5.75 per cent increase in the national minimum wage, the Fair Work Commission (FWC) announced on Friday, adding that the adjustments will take effect on July 1.

The increase falls between the 7 per cent rise advocated by the Australian Council of Trade Unions and the about 4 per cent sought by employer groups, reports Xinhua news agency.

Announcing the decision, the FWC said the current combination of economic circumstances, namely low unemployment, falling real wages and high inflation, "is very unusual and presents a particular challenge in this year's Review".

The Commission said a further challenge would be the expected sharp slowdown in economic growth over the next year.

"In our consideration, we have placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees, especially the low paid, to meet their basic financial needs," FWC said in the Announcement of Decision statement.

"Inflation is reducing the real value of these employees' incomes and causing households financial stress."

According to Australian Bureau of Statistics data, inflation hit 6.8 per cent in the 12 months to April, up from 6.3 per cent in the 12 months to the end of March.

The spike was largely driven by an increase in fuel prices after the end of the temporary cut in the government's fuel excise tax.

In the same period, the prices of housing, food and transport all rose by over 7 per cent.

The commission acknowledged that the awarded increase would not maintain the real value of minimum wage or reverse the reduction in real wages amid the cost-of-living crisis but said 5.75 per cent was the most that could be justified in the current economic circumstances.