Consumer confidence decreased by 0.5 per cent last week, a relatively small decline given the RBA increased the cash rate by 50bps. Across the major states confidence increased in Victoria and SA, while it dropped in NSW, Queensland and WA.
• ‘Weekly inflation expectations’ dropped 0.1ppt to 5.3 per cent, and its four-week moving average was also down 0.1ppt to 5.4 per cent.
• The confidence subindices results were mixed. ‘Current financial conditions’ rose 1.6 per cent, its third straight weekly increase.
‘Future financial conditions’ was practically unchanged with a 0.1 per cent rise to just above the neutral level.
• ‘Current’ and ‘future economic conditions’ decreased by 2.5 per cent and 2.0 per cent respectively, after four straight weeks of gains.
• ‘Time to buy a major household item’ rose 0.5 per cent after a 2.4 per cent increase the week before.
“Consumer confidence softened by just 0.5 per cent last week, even as the RBA raised interest rates by 50bp. This is the smallest decline after a 50bp increase this year. The previous three 50bp increases in June, July and August saw an average decline in confidence of about 5 per cent. It is possible that Lowe’s suggestion that the size of future rate increases might be smaller helped support confidence somewhat.” ANZ Head of Australian Economics, David Plank said.
“Lower petrol prices may also be helping sentiment, with household inflation expectations dropping 0.1ppt to 5.3 per cent. We wouldn’t read too much into the relative stability of sentiment, as the overall story remains the same – consumers are very pessimistic.”
