ANZ-Roy Morgan data reveals a 5.2-point drop in consumer confidence, marking the steepest weekly decline since February 2023
Australian consumer confidence has suffered its most severe weekly drop in nearly three years.
The latest ANZ-Roy Morgan Consumer Confidence index fell 5.2 points to 79.3 last week.
This marks the lowest reading since July 2024, effectively wiping out the sentiment gains seen after the Stage 3 tax cuts were introduced.
The decline was broad-based, with significant falls across all major subindices.
Household budgets under pressure
The "time to buy a major household item" subindex crashed by a massive 12.3 points.
This metric is now at its lowest level since April 2025, completely reversing the upward trend seen during late-year sales events.
Weekly inflation expectations also lifted slightly by 0.2 percentage points to 5.6%, while the four-week moving average remained steady at that level.
Perceptions of current financial conditions compared to a year ago dropped two points.
Looking ahead, confidence in future financial conditions over the next 12 months also declined by 2.1 points.
Brokers may see this reflected in reduced borrowing capacity or a hesitation among clients to commit to large purchases.
Rate hike fears resurface
ANZ economist Sophia Angala noted that the risk of a rate hike in the first half of 2026 has rattled households.
“Consumer confidence, which saw some improvement following Stage 3 tax cuts introduced in July 2024, has now plummeted to its lowest level since the tax cuts,” Angala said.
She highlighted that the sharp pullback follows a period of relative stability supported by moderating inflation.
However, household confidence in the five-year economic outlook has now dropped to its weakest level in over two decades.
This pessimism is likely driven by renewed speculation that the Reserve Bank may not be done with tightening just yet. While some experts argue that fears of a 2026 cash rate hike are "very premature", the uncertainty alone is enough to dampen spending.
Angala admitted that while ANZ expects the RBA to hold rates steady, the risks of a near-term hike have risen. The sharp decline follows a weak start to the year, as recently reported when consumer confidence started 2026 at its lowest New Year level since 1991.
With confidence sitting well below the neutral level of 100, the outlook for retail spending and credit demand remains challenging.
