May 2024 Insights

As winter approaches and the weather gets cooler, commentary surrounding the 2024-25 Federal Budget is heating up, with the government facing the tension between addressing cost-of-living pressures without contributing to rising inflation.

The cost of living continues to bite, with consumers keeping their wallets firmly closed. Retail sales fell by 0.4% in March after receiving a boost from the ‘Taylor Swift effect’ the previous month. Prices continue to rise, with a CPI increase in the March quarter to 3.6% annually. Education, health, housing, and food recorded the biggest price increases for the quarter.

The markets have been subdued as well, with the prospect of further interest rate rises both in Australia and the US. The S&P/ASX 200 was down by about 2.5% for April. Some economists are predicting that we may not see the first cuts in interest rates until November. Mining stocks have been generally buoyant as commodity prices continue to surge, while the energy and retail sectors have struggled.

The Australian Dollar has rebounded at just over US65c. However, with a strengthening US Dollar, economists are rethinking their six-month outlooks for the Australian Dollar, now predicting a range between US65c and US69c. The surprise factor in our currency’s fortunes has been the ailing Japanese Yen. Its weakness has translated to gains for the Australian Dollar, which ended April above 100 Japanese Yen, its highest level since 2014.

If there’s something affecting your financial situation that you’d like to discuss, please don’t hesitate to reach out to our team.