The Fair Work Commission has approved a 2.6 per cent increase in the minimum wage.

The decision will deliver a rise of $15.80 per week to Australia's lowest paid workers.

The increase affects 1.5 million people, and will take their weekly wage to $622.20.

Justice Iain Ross told the hearing factors including an expected increase in the unemployment rate led to the commission's decision.

"Inflation is expected to remain comfortably within the RBA's target range of 2 to 3 per cent," Justice Ross said.

The latest official data on inflation from the Bureau of Statistics shows consumer prices rose around 2.5 per cent in the year to March, roughly in line with the proposed wage rise.

"In addition to these considerations, the superannuation guarantee increase to apply from 1 July this year has also been a moderating factor in our assessment of the adjustment that should be made to minimum wages," Justice Ross added.

The Australian Chamber of Commerce and Industry had sought an increase of $5.80 per week, while the Australian Industry Group had called for a $12 rise.

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Australian Chamber of Commerce and Industry chief executive Peter Anderson says the minimum wage rise is a body blow for the small end of town.

"That is $1.5 billion of increased wages that have to be funded by Australia's small and medium business community," he said.

"Job security will be affected, but [businesses] will also seek to try to reduce working hours in order to maintain employment but also have a containable labour cost structure.

"That's not ideal for the business, it's not ideal for customers, it's not ideal for the workers themselves."

Unions wanted to see a $30 per week increase in the minimum wage.

ACTU secretary Dave Oliver says the commission's decision widens the gap between low paid workers and the average wage.

"This has been a blow for 1.5 million workers and their families across this country," he said.

"These are workers that operate in the retail sector, hospitality, they're carers, they're unskilled labourers and they're cleaners."

The wage increase will come into effect on July 1.