Consumer Confidence Hits Another 2024 Low, Impacting Economic Outlook
Consumer confidence in Australia has reached another low for the year, according to the latest ANZ-Roy Morgan Consumer Confidence Index. The index fell by 0.3 points to 80.2 points, with a four-week moving average of 80.5 points.
Subdued Spending and Economic Growth Concerns
The decline in consumer confidence is particularly concerning, as it could lead to reduced spending and slower economic growth. Consumers are feeling less optimistic about the future, and this is reflected in their spending habits.
The index for ‘time to buy a major household item’ fell by 4.4 points, indicating that consumers are less inclined to make big purchases. This is a significant indicator of consumer sentiment, as major household purchases are often considered to be a reflection of long-term confidence in the economy.
Rising Interest Rates and Cost-of-Living Pressures
The Reserve Bank of Australia’s decision to keep interest rates unchanged last week does not seem to have boosted consumer confidence. Mortgage holders saw their confidence drop by 3.8 points, reaching a 2024 low.
Consumers are also feeling the pinch from rising cost-of-living pressures. The ‘weekly inflation expectations’ index fell by 0.2 percentage points to 4.8%, while the four-week moving average was down 0.1 percentage point to 5.0%.
Five-Year Economic Outlook Worsens
Consumers are also less optimistic about the medium-term economic outlook. The index for ‘medium term economic confidence’ (next five years) decreased by 1.0 point. This suggests that consumers are worried about the long-term health of the economy and their own financial well-being.
ANZ Economist Madeline Dunk said: “ANZ-Roy Morgan Consumer Confidence is very weak, sitting at its lowest level for the year. Despite the RBA keeping the cash rate unchanged at last week’s meeting, consumer confidence fell 3.8pts for those paying off a mortgage. Confidence amongst this group is at a 2024 low, and is once again weaker than confidence amongst renters.”
Government Action and Hope for Improvement
The Australian government is expected to announce a range of cost-of-living measures in tonight’s Budget. It remains to be seen whether these measures will be enough to boost consumer confidence and stimulate economic growth.
Dunk added: “We’ll be looking to see if confidence picks up following tonight’s Budget, which will contain a range of cost-of-living measures.”
While consumer confidence is currently at a low point, it is important to remember that it can fluctuate rapidly. Positive economic news or government action could lead to a quick rebound. However, the current low levels of confidence are a cause for concern and should be closely monitored.