In his earlier review of the Westpac Consumer Confidence Survey, H&H commented that Australians are feeling poorer even as the country gets richer.
The chart above graphs the answer to the question of how consumers in the Westpac survey feel their family finances are going to be 12 months hence. It’s the pink line which we have inverted and mapped against the national average petrol price for Australia. It’s not a perfect statistical correlation but we can certainly see that they move together in trend terms.
Technically, petrol is a want, not a need, but for many of us whether travelling to work or doing the Saturday kiddy run to sport, using the car is mandatory. So with petrol up 20 cents a litre since the RBA’s last rate hike, the impost on the family budget has been significantly more negative than the RBA probably expected.
Petrol acts like a tax on the household and even though the absolute dollar value for most households is probably less than $20 a week (you would need to buy 100 litres at 20c a litre more than before) this adds to $1000 per annum which is no small bikkies. For the average Australian, it is a frequent purchase and so becomes self reinforcing in a negative sense.
As H&H intimated, even in boomtown Australia life is not easy. Too much debt, too many risks and a rising cost of living are keeping households constrained even if they are a little more confident overall than last month.