Survey points to soft household sentiment ahead of May rate decision
Consumer confidence was little changed last week, with the ANZ-Roy Morgan index down 0.2 points to 64.3, while the four-week moving average rose 0.3 points to 62.5.
Inflation expectations also moved higher. Weekly inflation expectations rose by 0.4 percentage points to 7.1%, with the four-week moving average broadly steady at 7.1%.
On household finances, perceptions of conditions over the past year improved, with the ‘current financial conditions’ index up 5.8 points. By contrast, views on the year ahead weakened, as ‘future financial conditions’ eased by 1.1 points.
Economic sentiment fell across both time horizons. ‘Short-term economic confidence’ (next 12 months) declined by 2.8 points, while ‘medium-term economic confidence’ (next five years) dropped 3.8 points.
The ‘time to buy a major household item’ subindex rose by one point.
“ANZ-Roy Morgan Australian Consumer Confidence was broadly unchanged last week, declining just 0.2 points,” said Sophia Angala (pictured right), economist at ANZ. “At 64.3 points, the series is at its fourth-lowest level since records began in 1973.
“The slight decline was driven by weaker economic confidence. This came amid the release of the March Labour Force Survey, which showed the unemployment rate holding at 4.3%. Overall, higher fuel prices and recent weakness in consumer confidence are likely to see consumer spending slow.
“Weekly inflation expectations rose to 7.1% last week, the third-highest result since the series began in 2010. In a fireside chat last week, RBA deputy governor (Andrew) Hauser noted that inflation in Australia is too high and highlighted the importance of keeping inflation expectations anchored. We continue to expect the RBA to increase the cash rate by 25 basis points in May.”
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