Adelaide Timbrell

And when it comes to, you know, how hot the economy is running, if we do keep seeing the government spending a lot of money, households spending a lot of money and businesses, you know, investing well, all of these are positive things.

But if we do them a little too much, we can see inflation go up too quickly.

And that's really where the Reserve Bank needs to step in.

And that's why we will see that pretty aggressive increase in the cash rate through this year.

That's right.

So we are seeing a slight easing on oil prices and also other supply chain pressures in the world as well.

So it is good news that eventually we should hopefully see some of those supply side disruptions calm down, perhaps in the next 12 to 18 months.

But certainly petrol prices are something that has affected consumer confidence.

We're seeing people Google the words petrol prices about seven times more than they usually do in the last six to eight weeks.

And so although that is hitting the mindset and the wallet of a lot of people in Australia, what we are seeing is that they're not necessarily slowing down on other spending.

So we're still seeing people put a lot more money than usual into planning travel spending, travel agents and the like.

We're seeing people not really derail

their other discretionary spending like you know clothing or department store spending and all this means that even though yes these cost of living pressures are going to hit some people worse than others on average we are seeing that people are going into those COVID savings feeling confident enough to use those to absorb some of those cost of living pressures and that's a really good sign for housing as well because it does show that households feel confident enough to you know keep going with their spending and are also more likely to then feel confident enough to you know get a mortgage or upgrade a

It absolutely does.

When we think about wages, there's two things that happen.

There's the amount of dollars in your paycheck and then there's what you can buy with it.

This year, we think the amount of dollars in the average paycheck is going to go up quite nicely, a lot more than it has in the last seven to eight years in Australia.

But the amount of stuff you can buy with that paycheck will actually still be falling.

We call that falling real wages growth.

Next year, though, we're going to see the increase in the cost of living really slow down and the increase in wages speed up.