ANZ-Roy Morgan Consumer Confidence dropped 3.5 points to 74.3 this week after the Reserve Bank of Australia (RBA) raised interest rates by 0.25% to 4.3%.
This is the highest official interest rates have been in 12 years.
Consumer confidence is now at its lowest since mid-July 2023 and has spent a record 41 straight weeks below the mark of 85. The index is now 6.5 points below the same week a year ago and is now clearly below the 2023 weekly average of 78.0.
ANZ senior economist Adelaide Timbrell said alongside the plummet in confidence, the outlook for the economy over the next five years, fell to its lowest level since April 2020. Now, 10% (down 1ppt) of Australians expect ‘good times’ for the economy over the next five years compared to 24% (up 4ppts) expecting ‘bad times’.
“This suggests that the RBA hike may have been a negative economic signal for some households,” Timbrell said. “The fall in confidence was driven by those most exposed to the rate hike, those paying off their homes and those who own their homes outright (a cohort including many who have investor mortgage debt).
“Continued elevated inflation is also keeping confidence low across all cohorts.”
Meanwhile, 20% (unchanged) of Australians say their families are ‘better off’ financially than this time last year compared to a majority of 54% (up 2ppts) that say their families are ‘worse off’.
Under a third of Australians (28% - unchanged), expect their family to be ‘better off’ financially this time next year while 38% (up 1ppt) expect to be ‘worse off’.
Only 7% (up 1ppt) of Australians expect ‘good times’ for the Australian economy over the next twelve months compared to two-fifths, 40% (up 2ppts), that expect ‘bad times’.
When it comes to buying intentions, the burst of hope seen last week has been “snuffed out” this week, according to ANZ and Roy Morgan. Now only 18% (down 4ppts) of Australians say it is a ‘good time to buy’ major household items as we enter the Christmas retailing period while a growing majority of 55% (up 4ppts) say now is a ‘bad time to buy’.