Consumer Confidence drops to lowest since early April 2020

Last week, the RBA further rose rates to a decade high as it lifted official interest rates up 0.25 percent to 3.35 percent, the ninth increase since last May with indication it will further raise this in coming months. Consumer Confidence has plummeted following the news.

The survey, conducted by ANZ and Roy Morgan revealed that Consumer Confidence dropped over five points this week to 78.1. Compared to the same week a year ago, this is over 25 points lower, and 6.8 points below the 2023 weekly average of 84.9. Only 7 percent of Australians expect ‘good times’ for the Australian economy over the next twelve months compared to over two-fifths, 41 percent that expect ‘bad times’. This carries over into the longer term with a five year outlook reflecting similarly glum sentiment.

“Consumer confidence fell after the RBA raised interest rates by 25bp. This was the sharpest weekly drop in confidence since the June 2022 RBA meeting, which delivered the first 50bp cash rate hike of the current interest rate cycle,” said ANZ Senior Economist, Adelaide Timbrell. “The average confidence among people paying off their mortgages fell sharper than other housing cohorts last week, by 10pts to its lowest since early April 2020. Confidence among homeowners and renters also fell, by 5.2pts and 2.9pts respectively. The subindex for whether ‘it is a good time’ to buy a major household item dropped to its lowest since April 2020.”

The weekly ANZ-Roy Morgan Australian Consumer Confidence Rating interviews over 1000 Australians and seeks to reflect to vox pop mindset as it questions them on whether they think they will be better off/worse off and their expectations for good or bad times ahead. The survey revealed four of the five confidence subindices were down, with the ‘current financial conditions’ category falling 4.9pts to just above its record low in late March 2020, and the ‘future financial conditions’ question similarily dropped 3.7 pts. The ‘current economic conditions’ plunged 9.3pts, which was its third straight weekly decline according to ANZ. The ‘time to buy a major household item’ category dropped 11 points .  The only rise wasin the question looking to the future, with the ‘future economic conditions’ question rising 1.2-pts.

The lowest point in Consumer Confidence was recorded in 2020 at 72.2 percent when it fell by over 27 percent following the COVID 19 outbreak with only the levels seen during the 1990-91 recession comparable.

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