Consumer confidence dropped 1.5 per cent last week as inflation expectations hit a record high, taking the cumulative fall in confidence over the past six weeks to 10.4 per cent.
Among the mainland states, confidence increased in Victoria, Queensland and Western Australia, while it dropped in New South Wales and South Australia.
‘Weekly inflation expectations’ rose 0.2 percentage points to 6.8 per cent last week, its highest value on record (going back to 2010). Its four-week moving average rose 0.3 percentage points to 6.4 per cent.
The subindex results were mixed. ‘Current financial conditions’ rose 1.5 per cent, after a 9.6 per cent drop over the previous five weeks. ‘Future financial conditions’ gained 1 per cent, after an 11.4 per cent fall over the previous three weeks.
‘Current economic conditions’ slipped 1.6 per cent, its third straight weekly decline. ‘Future economic conditions’ lost 4.8 per cent, dropping to its lowest since mid-April 2020.
‘Time to buy a major household item’ declined 3.1 per cent.
“Consumer confidence dropped 1.5 per cent last week as the RBA raised interest rates by 25 basis points,” ANZ Head of Australian Economics, David Plank said. “This was a sixth consecutive weekly decline in confidence, taking the index to levels last seen in early April 2020.
“Household inflation expectations climbed to 6.8 per cent, its highest level since these data were first collected in April 2010.
“Falling confidence and rising inflation expectations creates a difficult mix for the RBA. Consumer concerns about the economy are reflected in the ‘economic conditions next year’ subindex, which has dropped seven times over the past nine weeks for a total decline of 17 per cent.
“Confidence among people paying off their mortgages surprisingly increased 2.6 per cent but remained lower than those who own their home (down 3.1 per cent) or those renting (down 2.6 per cent).”
