Vaccine boosts consumer confidence

The consumer confidence reading has ended a three-week decline to jump 1 per cent as COVID-19 vaccines arrived. The subindices were mixed.

‘Current financial conditions’ softened 0.2 per cent, while ‘future financial conditions’ improved 1.1 per cent. ‘Current economic conditions’ gained 2.4 per cent but ‘future economic conditions’ declined 2.6 per cent.

‘Time to buy a major household item’ surged 4.2 per cent, reversing most of the decline in the previous week. The weekly inflation expectations rose to 3.9 per cent (up 0.3 percentage points).

“Consumer confidence reversed its three-week losing streak as the nationwide inoculation program began a week ago,” ANZ Head of Australian Economics David Plank said. “Headline confidence is around its long-run average.”

“What stands out is the jump in weekly inflation expectations to 3.9 per cent (from 3.6 per cent a week ago), its highest level since early April. Higher global fuel prices pushed up the average domestic retail petrol price by 1.6 cents/litre last week.”

“This, coupled with a strong housing market and faster than expected recovery in the labour market, could be fuelling inflationary concerns. Inflation expectations are still below pre-pandemic levels, so could rise further without causing undue alarm for the RBA.”

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