Modest decline in consumer confidence

Consumer confidence was practically unchanged last week with a decline of just 0.2 per cent even as the RBA lifted the cash rate target for the first time in more than a decade. Among the major states, confidence increased in NSW and SA, while it dropped in Victoria, Queensland and WA.

• ‘Weekly inflation expectations’ decreased by 0.2ppt to 5.1 per cent, and its fourweek moving average dropped 0.2ppt to 5.2 per cent.

• The confidence subindices results were mixed. ‘Current financial conditions’ rebounded 4.0 per cent. ‘Future financial conditions’ rose slightly by 0.3 per cent but stayed near its lowest level since April 2020.

• ‘Current economic conditions’ fell 0.8 per cent, while future economic conditions decreased by 2.4 per cent.

• ‘Time to buy a major household item’ declined 2.2 per cent, also dropping to its lowest level since April 2020.

“Consumer confidence dropped by just 0.2 per cent last week after a 6.0 per cent drop the week before. This suggests that consumers had anticipated the likely increase in interest rates by the RBA.” ANZ Head of Australian Economics, David Plank said.

“Still, the rise was not entirely without impact. Confidence among people who are ‘paying off their home loan’ dropped by 5.0 per cent, reinforcing the 9.6 per cent drop in the previous week. This was partially offset by the increase in confidence for those who already own their home or are renting by 1.3 per cent and 2.6 per cent respectively. Household inflation expectations dropped 0.2ppt to 5.1 per cent despite a slight increase in petrol prices last week.”

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