The decline in demand in the economy is documented by the following indicators: Household consumption, which is crucial for the future course of demand-pull inflation, fell for the sixth consecutive quarter and is below the pre-Covid level. The saving rate is now 21.7% (data for 2022 Q4), while the long-term average is 12%. The decline in demand is also illustrated by the fact that prices of new apartments are already falling quarter on quarter. I want to emphasise that there is no wage spiral in the economy. The average nominal wage rose by 8.6% year on year in Q1. Nominal wages increased half a percentage point more slowly than expected in our May forecast, which expects inflation to return to the target in the first half of next year. The average real wage fell by 6.7%, decreasing for the sixth consecutive month. For comparison, the average wage at the CNB used to be linked to inflation. However, we managed to renegotiate this with the trade unions, and the average wage at the central bank rose by 4.5% this year. We are thus setting an example, not least by showing that inflation clauses can often be changed by agreement of the two parties. These are steps that can be taken to avoid a wage spiral. The decline in real demand means that the economy is below potential output and we have a negative output gap. Interest rates are slowing growth in the quantity of money in the economy. Inflation pressures are fading as a result.
These are only some of the many dynamics that we are experiencing at a rapid pace today. What these underscores to all of us, is the importance of continuous learning so we can continue to adapt and evolve. I am sure the knowledge you have learnt in your respective courses will provide you a strong foundation as financial planners professionals. However, to keep pace with the changing environment you must have a lifelong learning mindset. It is important to keep abreast with the latest economic developments and continuously update your information set so that you are able to provide the most optimal advice to your clients. Apart from providing information and filling the gaps in financial knowledge, financial planners play the important role of defusing biases that lead to common financial mistakes among consumers and help mediate in joint decision-making. This is especially true for vulnerable consumers who largely lack capability to fully understand and comprehend the risk-return assessments, not only of complex financial products and services but sometimes even those basic ones. One financial decision can have far-reaching consequences on their current and future livelihood. It is therefore crucial not to downplay the importance of professional advice in improving the quality of life and the wellbeing of individuals and households.