Q+A: The Week Ahead | 22 June 2026
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What inflation data can we expect for May?
Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Michael Thompson, and every Monday morning, we are joined by economist Stephen Koukoulis to look at the week ahead. You'll find him at thekouk.com, T-H-E-K-O-U-K.com, and sharing his views on LinkedIn as well. Stephen, good morning. Very good morning, Michael. God, it's a bumper week this week. It is essentially Christmas for economists because there is just data releases all over the place. Last week, the Reserve Bank obviously left interest rates on hold, as was widely expected.
How might the RBA respond to rising inflation?
But... Governor Michelle Bullock made it clear that another rate hike isn't off the table if inflation remains stubbornly high, right? So there's a bit of a warning there. To that end, this week, we get the monthly inflation figure for May, right? We know this is an important number.
What are the implications of the upcoming unemployment figures?
What are we going to see?
What are we going to see? It is important, and you're quite right. The Governor, Michelle Bullock, was quite explicit that inflation remains the number one problem in the economy right now and that they're not going to rest until they get inflation lower back on track to the target. And if that means unemployment drifts up, my word's not hers, so be it. That's sort of part of what they're trying to do.
How do job vacancies reflect the health of the labor market?
So in a sense, it's fight inflation first and then clean up the labour market data if we actually get higher unemployment. Now, this week, we get the May inflation numbers. I hate to say it, they're going to be very high. Even though the price of petrol fell in May in part due to the excise reduction sort of fully kicking in, that $0.32 a litre that the government implemented, which, by the way, is coming off on the 30th of June, or probably coming off, I should say, on the 30th of June, it's going to be a high number. The annual increase will probably be just below 5%. it'll probably be about 4.8%, 4.9% because there's a very low rate dropping out of your year-on-year run rate. So even with a modest increase or even a small fall because of the petrol shock, you're going to get headline inflation jumping.
We know that. As we've discussed in the past, and everybody hopefully knows now, that it's the trimmed mean inflation rate that matters. That's probably going to be a little better behaved, but still above target at about 3.4 in annual terms.
What insights do household spending figures provide?
So it won't give any comfort to the people thinking that there could be a rate cut around the corner. It won't be of much comfort to the RBA, even though they know it's coming. But hopefully, hopefully, we get a couple of surprises. And even if it's a tenth or two lower than expected, that will be mildly encouraging anyway.
How much capacity is there for surprises in these kind of monthly figures?
Oh, Michael, there's tons. I'm having looked at this stuff for many a long decade now. The word, the data surprise today... blah, blah, blah. And it can surprise on the upside, on the downside.
How does consumer sentiment compare to actual spending behavior?
It can happen on particularly the labor force, which is incredibly volatile. By the way, that's out later this week too. But on the inflation numbers, on GDP, on any indicator that's out there, the Bureau of Statistics, who are fantastic, they're one of the world's best statistical officers in the world. They do a great job in measuring the economy. However, us mere mortals the economists out there who are trying to forecast these things we might actually miss at the price of oh i don't know bananas went up and that could impact the cpi by a tenth and if you get another surprise on another item that goes in the same direction all of a sudden the headline figure that drops out um is out by a long way and you get a data surprise so look
We have our forecasts and we react according to the forecast. And of course, the other thing, just by the way, we often benchmark our forecasts against what the Reserve Bank's thinking. Are they higher or lower than the Reserve Bank? Because after all, they're the ones who determine interest rates, not me or my friends in the markets.
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Chapters
8 chapters
1
What inflation data can we expect for May?
0:05–0:46
2
How might the RBA respond to rising inflation?
0:46–1:04
3
What are the implications of the upcoming unemployment figures?
1:04–1:34
4
How do job vacancies reflect the health of the labor market?
1:34–2:40
5
What insights do household spending figures provide?
2:40–3:17
6
How does consumer sentiment compare to actual spending behavior?
3:17–4:18
7
What factors are affecting different demographics in spending?
4:18–6:01
8
What are the broader economic implications of these data releases?
6:01–12:04
Speakers
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