Q+A: The Week Ahead | 31 Aug 2026

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're 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, as always, on LinkedIn as well. Stephen, good morning. Good morning, Michael. Stephen, what a difference a week makes, right? When we were talking last week, we were talking about the July inflation figures and whether we might get a surprise and whether we're just going to see them kind of continuing to trend down and all of this. But, but... We've got a lot we need to talk about this coming week. But first, we need to touch on what did end up happening because we looked at the potential for a surprise. We did get a surprise. Inflation higher than expected. Underlying inflation remaining very, very sticky. The big banks now tipping another rate hike this year. Add into that then the household spending data that came through last week as well that shows that we are still still spending a lot of money. Consumers are still putting their hands in their pockets nonstop. What do you make of it all? What cost of living crisis?

And

I don't

mean that flippantly necessarily, but to me, while the inflation numbers, yes, they surprised on the high side, and yes, inflation's not falling to the extent that we would like it, and certainly to the extent that the Reserve Bank would like. So annual headline inflation, 3.5%. Trimmed mean, 3.6%. they're still a long way from the 2.5% that the RBA wants to see. And while there's a few little signs that inflation will track a bit lower, will it get to the midpoint of the target band soon or is it later? And do we need, as you alluded to, need another nudge from the Reserve Bank with an interest rate hike to make sure that it does get there? But to me, the biggest shock arguably was the household spending numbers up 1% in July, up 7% through the year. And the interesting sort of subset of those numbers is that, okay, spending on essentials, my definition, continues to track along at an okay pace. Spending on discretionary items, so that's nice to do things, holidays and restaurants and cafes. Restaurants, yeah. Is booming. So the numbers are completely at odds with the consumer sentiment numbers, which remain pretty weak. But the household spending numbers were really pointing to the economy and the household sector, which is over half of the economy, performing way better than anybody was thinking.

Which leads us perfectly into what is happening this week. And before I get your take, I'll ask you a little bit later on what you think the Reserve Bank is going to end up doing, whether the three of the big four are correct in tipping there'll be a rate hike this year. But what they're going to be looking at this week is the GDP figures and finding out just how much the economy has grown. What are we expecting for the June quarter?

For the June quarter, growth of probably around about 0.5%. So not too hot, not too cold, but sort of confirming that the economy has slowed a bit. Last year, we were running at GDP