Interest Rates Drive Consumer Confidence Down

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By Published On: July 8, 20220 Comments

Consumer confidence remains low, now dropping one point to 83.7. This comes as the RBA set to increase interest rates once again, now for the third month in a row. 

This week’s confidence levels are 10.1 points below the 2022 weekly average of 93.8. Moreover, this is 24.1 points below the same week in 2021, when the confidence levels were 107.8.

This drop also applies to buying intentions – only 26 percent say that now is a good time to buy major household items, dipping by one percentage point. In contrast, nearly half (47 percent) say that now is a bad time to buy major household items, increasing by four percentage points.

“Consumer confidence decreased 1.2 percent last week, driven by a 4ppt increase in the number of respondents who think it is a ‘bad time to buy’ a major household item,” shared David Plank, the ANZ Head of Australian Economics.

“A possible reason for this could be the conclusion of End of Financial Year sales,” he said. “Expections of a further increase in the interest rate by the RBA at its meeting today could be another reason behind the dampened sentiment. Household inflation expectations rose 0.2ppt to 5.9 percent last week, exactly reversing its fall the week before.”

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