Aussie consumer confidences plunges to August 2020 low

The mood among Australian consumers continues to worsen, with the ANZ-Roy Morgan consumer confidence index plunging to its lowest level since mid August 2020 when Australia was in the early stages of the pandemic:

Australian consumer confidence index

Four of the five confidence subindices dropped.

‘Current financial conditions’ fell 4.4%, while ‘future financial conditions’ dropped 0.4%. ‘Current economic conditions’ increased 1.5%, while future economic conditions decreased slightly by 0.2%. ‘Time to buy a major household item’ also fell 2.7%, dropping 14.7% over the past three weeks.

According to ANZ Head of Australian Economics, David Plank:

Consumer confidence dropped 1.3% last week, its third consecutive weekly loss. Last week’s decline was mainly driven by drops in the subindices that capture the ‘financial situation compared to a year ago’ and whether it is a ‘good time to buy a major household item’.

This suggests that cost of living concerns are front and centre for consumers.

Among the respondents ‘paying off their home loan’, confidence dropped 0.6%, falling a cumulative 14.7% over the past three weeks. Confidence was 2.7% lower for people who ‘own their home’, while it rose 0.5% for people who are ‘renting’. Household inflation expectations rose 0.2ppt to 5.3% amid higher petrol prices.

Inflation expectations have risen slightly following the plunge after the fuel excise was halved in the federal budget:

Weekly inflation expectations

This is bad news for the Coalition, with depressed households more likely to dump the incumbent government.

Unconventional Economist

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