Following a week of significant growth, Australian consumers have backtracked their confidence moving into the third week of February.
Consumer confidence has backtracked from its growth last week, now dropping 1.4 pts to 101.8. The third week of February remains a smidge above the 2021 weekly average of 101.5 but is lower than the same period in 2021 when it was 109.2.
This was a sentiment across the country, with only Victoria recording an increase to offset the downward trend. The most significant decreases were in NSW and Tasmania.
“Inflation expectations rose 0.1ppt to 5.1 percent last week, its highest since December 2014. With petrol prices at record highs during the past few weeks the lift in inflation expectations is not surprising,” said David Plank, the ANZ head of Australian Economics.
Sentiment for buying a major household item has also taken a hit, decreasing by 1ppt to 34 percent. In contrast, there has been a 2ppt increase for those saying that it’s a bad time to buy a major household item, also sitting at 34 percent.
“Consumer confidence dropped 1.4 percent despite the easing of COVID restrictions in NSW and the imminent reopening of international borders to tourists,” continued Plank. “The expectations of higher inflation might have had a dampening effect on overall sentiment. Confidence dropped by 5.6 percent in NSW, 0.7 percent in QLD, 0.8 percent in SA and 2.8 percent in WA, while it increased in Victoria by 2.9 percent.”
How much are Australian households planning to spend in the coming weeks? According to a report from the ABS, household spending increased 8.6 percent in December 2021, compared to December 2020.
The report indicated that the most significant category in this household spend increase was in furniture, which grew by 27.4 per cent. According to Jacqui Vitas, Head of Macroeconomic Statistics Division at the ABS, household consumption contributes around 50 percent of the Australian GDP
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