ANZ-Roy Morgan Consumer Confidence was down 1.8 points to 81.3 this week, ahead of the Reserve Bank’s highly anticipated meeting on Australian interest rates today.
After last week’s inflation numbers for the June Quarter 2024 were in line with forecasts, as reported by the Australian Bureau of Statistics, the widely held expectation is that the RBA will increase interest rates this week.
Consumer confidence has now spent a record 79 straight weeks - equivalent to 18 months - below the mark of 85. However, the index is now 6.3 points above the same week a year ago, and is 0.5 points above the 2024 weekly average of 81.8.
ANZ economist Sophia Angala said confidence declined for a second consecutive week, following the six-month high a fortnight ago.
“Weekly inflation expectations rose 0.1pts to 5.1 per cent despite Q2 Consumer Price Index data printing largely in line with the RBA’s expectations, alleviating concerns around a potential cash rate hike.
“This would usually be a positive for consumer confidence. However, coverage of the heightened recession concerns in the US over the weekend may have offset this.”
Angala added that the positive impact of Stage 3 tax cuts appears to be waning, driven by a 4.9 point drop in households’ confidence in their own financial conditions over the next 12 months, one of the largest weekly falls for this subindex in 2024 so far.
“However, the boost to disposable incomes from the tax cuts may still be supporting the ‘time to buy a major household item’ subindex, which rose 1.3pts last week.”
A look at consumer confidence by state shows there were mixed results, with small increases in New South Wales and Victoria, virtually unchanged in South Australia and significant decreases in Queensland and Western Australia.
According to Roy Morgan and ANZ, the driver of this week’s decline was decreasing confidence about personal finances – especially as it relates to the year ahead while views on the long-term health of the economy also declined.
Now just over a fifth of Australians (21 per cent - unchanged), say their families are ‘better off’ financially than this time last year compared to 51 per cent (up 2ppts) that say their families are ‘worse off’.
Views on personal finances over the next year have fallen this week, with only 30 per cent (down 2ppts) of Australians expecting their family to be ‘better off’ financially this time next year while 34 per cent (up 3ppts) are expecting to be ‘worse off’.
Just 8 per cent of Australians (down 1ppt) expect ‘good times’ for the Australian economy over the next twelve months compared to 34 per cent (down 1ppt) that expect ‘bad times’.
Net sentiment regarding the Australian economy in the longer term was down this week with only 10 per cent (down 2ppts) of Australians expecting ‘good times’ for the economy over the next five years compared to 20 per cent (up 1ppt) expecting ‘bad times’.
As for buying intentions, 22 per cent of Australians (down 1ppt) say now is a ‘good time to buy’ major household items compared to a large plurality of 46 per cent (down 2ppts) that say now is a ‘bad time to buy’ major household items. ANZ and Roy Morgan noted that the latter figure has hit the lowest point for over 18 months since January 2023.