Stagnating wage growth, a rising cost of living – notably sky-high electricity prices – are keeping household budgets tight.

But Aussies have spent up big on in the Boxing Day sales, splurging a record $2.5 billion, making it the biggest trading day of the year.

“I just don’t understand how these two positions can correlate,” says Michael McLaren.

“On the one hand, people have never had it tighter… and on the other hand, we’ve got record money to blow at the shops on Boxing Day.”

But Treasurer Josh Frydenberg says despite Australia “facing cost of living pressures… the domestic economy is strong”.

“We are seeing people have confidence in the government’s economic management and in the strength of the domestic economy.”

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