The weekly ANZ-Roy Morgan Consumer Confidence Index has fallen 1.2% and remains firmly at recessionary levels:
According to ANZ Head of Australian Economics, David Plank:
Consumer confidence decreased 1.2% 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. A possible reason for this could be the conclusion of End of Financial Year sales. Expectations 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% last week, exactly reversing its fall the week before.
The next chart shows that inflation expectations have almost rebounded back to April’s peak before the federal government halved the fuel excise:
The next chart plots the consumer confidence index over the very long term, with confidence tracking at the lowest level since the early-1990s recession, not including the brief COVID downturn in early 2020:
The RBA has never commenced a rate hiking cycle with consumer confidence already at recessionary levels. This spells bad news for the economy, since household consumption is the economy’s biggest growth driver.