ANZ-Roy Morgan Consumer Confidence has decreased by 3.2 points to 75 this week.
The index has now spent 39 straight weeks below the mark of 85 – equalling the longest streak at this level set in 1990-91.
Consumer confidence is now 4.9 points below the same week a year ago and is below the 2023 weekly average of 78.1.
Driving this week’s decrease were increasing worries about the year ahead both in terms of personal finances and also the performance of the Australian economy, Roy Morgan and ANZ noted.
Now 17% of Australians (down 1ppt) say their families are ‘better off’ financially than this time last year compared to 56% (up 3ppts) that say their families are ‘worse off’.
Under a third of Australians (29% - unchanged) expect their family to be ‘better off’ financially this time next year while 37% (up 1ppt) expect to be ‘worse off’.
Only 6% (down 2ppts) of Australians expect ‘good times’ for the Australian economy over the next twelve months compared to 40% (up 4ppts) that expect ‘bad times’.
In the longer term, net sentiment regarding the Australian economy is unchanged, with 11% of Australians expecting ‘good times’ for the economy over the next five years compared to 19% expecting bad times.
ANZ senior economist Adelaide Timbrell said the index declined after an “uncomfortably high” inflation print for the recent quarter, alongside expectations of a rate hike by the Reserve Bank of Australia (RBA) in November.
“The indices that capture confidence in ‘current’ conditions declined the most, including current finances, the short-term economic outlook and whether it is a good ‘time to buy a household item’,” Timbrell said. “Among the housing cohorts, confidence fell across all groups.”
The recent quarterly consumer price index (CPI) lifted by 1.2%, driven by fuel sales, rents, the housing market and electricity.
RBA governor Michele Bullock said the recent quarterly CPI came out a little higher than her team forecasted.
“But it was pretty much where we thought it would come out, given the information we'd come into since then, particularly the monthly CPI indicator,” Bullock said.
Bullock said fuel prices being the key driver is not entirely surprising, given they’ve been rising for some time, but said her team has observed a continual moderation of goods price inflation, which is reportedly on the decline.
“We're seeing, generally, in the prices for consumer durables and those sorts of things, the inflation there is coming down,” Bullock said. “The thing that we've been saying for some time, which this particular CPI print reinforced, is that services inflation, generally, is remaining fairly persistent.
“When I say persistent, it means that the inflation in those sorts of components of the CPI tends to last longer. This is a trend we've seen overseas as well.
Bullock said while goods price inflation is easing as supply issues unwind, services inflation is still higher than expected despite the measurement being on the decline.
“As for what exactly this means, we've now got to take the information away. We've got to think about our own forecasts for that.
“We will be releasing a new set of forecasts after the board meeting in a couple of weeks time in the Statement on monetary policy, and there we'll have a reflection on what this might mean for our forecasts, but that's my initial reaction.”
Looking at next week’s meeting, Bullock said the RBA is remaining open to another rate hike.
“We're looking at some of the more persistent parts of inflation and asking ourselves: are there signs that those might be coming down in the future?” Bullock asked. “We don't know if the job is done yet, and we've made that very clear.
“Even though we haven't raised interest rates since our last interest rate rise in June, we've made it very clear that we might need to go again. We had not ruled that out, and we're in the same position now.”