Australian consumers are starting to feel the inflationary pinch, despite strong spend projected for the Christmas period.
ANZ-Roy Morgan Consumer Confidence fell 2.4pts to 82.2 for the week to October 16/17, now 24.8pts below the same week a year ago. Consumer Confidence is 8.1pts below the 2022 weekly average of 90.3.
ANZ head of Australian economics David Plank said inflation expectations have jumped to their highest level since late July, when petrol prices last peaked.
“The weaker AUD, along with an uptick in petrol prices over the past couple of weeks, likely led to the surge in household inflation expectations to 6%. This weighed heavily on consumer sentiment, with the subindex that captures whether ‘it is a good time to buy a major household item’ dropping 6.2%.
“Very weak consumer confidence has not, so far, translated into lower household spending. But the longer confidence remains so low, the greater the prospect that consumers become more cautious, especially with household wealth going backwards due to lower house and equity prices.”
The confidence levels fell in most states, including NSW, Victoria, Queensland and South Australia, with improvement in Western Australia.
Roy Morgan cited the personal financial indicators and the good/bad time to buy indicators drove the fall in the index.
In current financial conditions, 22% of Australians (down 1ppt) say their families are ‘better off’ financially than this time last year, compared to 45% (up 1ppt) who say their families are ‘worse off’ financially.
Looking forward, fewer than a third of Australians (32% - unchanged) expect their family to be ‘better off’ financially this time next year while 34% (up 4ppts) 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 more than a third (38% - unchanged) that expect ‘bad times.’
Sentiment regarding the Australian economy in the longer term is down this week, with only 11% (down 2ppts) of Australians expecting ‘good times’ for the economy over the next five years, compared to 18% (unchanged) expecting ‘bad times’.
When it comes to buying intentions, 22% (down 2ppts) of Australians say now is a ‘good time to buy’ major household items, while more than twice as many (48% up 3ppts) say now is a ‘bad time to buy’.