Mortgage holders can be more optimistic about the upcoming 12 months than in previous years, the treasurer says, ahead of crucial inflation data being released.
While he declined to speculate on whether the Reserve Bank will cut interest rates at its next meeting in February, Jim Chalmers said the economic outlook for the year ahead was rosier than in the past.
"There are real reasons for people to be confident about 2025 ... there is good cause for confidence, not complacency about the economy in 2025," he told ABC radio on Tuesday
"We are making progress on inflation. We have got those real wages growing, we have kept the jobs market in really quite extraordinary conditions, so all of those things will flow through into some of the other indicators.
"We expect growth in our economy to pick up a little bit, not a lot, but a little bit, and that will be a good thing."
The comments come as figures released on Wednesday will provide a better picture on how the fight against inflation is shaping up, when the consumer price index for the December quarter is revealed.
The previous quarter's figures showed headline inflation fell to 2.8 per cent, within the Reserve Bank's target ban of between two and three per cent.
However, underlying inflation - which takes out volatile changes - was at 3.5 per cent.
The quarterly data on inflation carries greater weight than the monthly figures for the Reserve Bank ahead of its upcoming meeting on whether to cut interest rates.
Dr Chalmers said while there was still global uncertainty in the markets, Australia was on track to make progress.
"The combination of real wages growing again, inflation coming down and the tax cuts rolling out means that we are starting to make up some of the ground that's been lost over the last few few years," he said.
It comes as Western Australia remained the country's best performing economy, according to the latest CommSec State of the States report.
WA topped five of the eight economic indicators to lead the national performance rankings in the September 2024 report for the second quarter in a row - and only the second time in a decade.
While economies had slowed in response to higher interest rates and inflation, CommSec chief economist Ryan Felsman said states and territories had proved resilient due to a strong job market and solid population growth.
“As consumers respond to higher borrowing costs and price pressures, the future path will depend on whether the job market can hold up as well as the trajectory of interest rates over the coming months,” he said.
“As expected, the interest rate-sensitive south-eastern states and territories remained in a tight cluster mid-table.”
Queensland moved up from third to join South Australia in second spot, Victoria remained in fourth place and Tasmania was steady in fifth.
NSW leapfrogged the ACT from seventh to sixth, with the Northern Territory remaining eighth.
WA's top performances across retail spending, unemployment, population growth, housing finance and dwelling starts helped it retain its leading position.
SA led the nation on real economic growth, Victoria was strongest for construction work, and the NT ranked first for equipment investment.
Perth had the highest inflation rate (3.8 per cent) in the September 2024 quarter and Tasmania had the fastest wage growth (4.0 per cent).
National home prices rose by 4.9 per cent, with WA recording the biggest annual rise - 19.1 per cent.
