ANZ-Roy Morgan Consumer Confidence dropped 1.8 points to 86.7 this week, ahead of the Reserve Bank of Australia’s decision on interest rates.
Consumer confidence is now 4.1 points above the same week a year ago and just 0.2 points below the 2025 weekly average of 86.9.
ANZ economist Sophia Angala said the slip is a pullback from the 32-month high the week before.
“Most subindices fell in the week, but only one is below its H2 2024 average: households’ confidence in their current financial conditions is at its lowest level since late September,” Angala said.
“Household confidence on the economic outlook and their finances over the coming year are still well above the H2 2024 average.”
Many economists are predicting a rate cut when the RBA board meets early next week, driven by slowed economic growth and continued decline in headline inflation.
However, trimmed mean inflation was at 3.2 per cent, just above the 2-3 per cent range that the RBA is aiming for. The RBA has previously indicated that it’s focusing on trimmed mean over headline inflation for its decision.
A look across the consumer confidence index shows rising concerns about the Australian economy were the main driver of this week’s small decline.
Under a fifth of Australians (19 per cent – down 1ppt) say their families are ‘better off’ financially than this time last year compared to 48 per cent (up 2ppts) that say their families are ‘worse off’. The ‘better off’ indicator here is the lowest figure since July 2024.
Views on personal finances over the next year were virtually unchanged this week with just over a third of respondents (34 per cent – up 1ppt) expecting their family will be ‘better off’ financially this time next year while 28 per cent (unchanged) expect to be ‘worse off’.
Just over one-in-ten Australians (11 per cent – unchanged) expect ‘good times’ for the Australian economy over the next twelve months compared to 28 per cent (up 1ppt), who expect ‘bad times’.
Net sentiment regarding the Australian economy in the longer term declined this week with just 12 per cent (down 1ppt) of Australians expecting ‘good times’ for the economy over the next five years compared to 20 per cent (up 3ppts) expecting ‘bad times’.
Meanwhile, net buying intentions slipped slightly this week with 26 per cent (down 1ppt) of Australians saying now is a ‘good time to buy’ major household items compared to 44 per cent (unchanged) that say now is a ‘bad time to buy major household items’.
Angala said the ‘time to buy a major household item’ subindex lowered 0.9 points over the week to 81.8 points, which is still up by 12.1 points since the introduction of Stage 3 tax cuts in July 2024.
“The headline consumer confidence series has lifted 7.7pts over the same period, and alongside stronger than expected Q4 retail volume data last week, this suggests the recovery of the consumer is in motion,” Angala said.