Consumer confidence falls ahead of RBA decision

Fall (ahead of RBA decision)

• Consumer confidence fell 1.5pts last week to 70.5pts. The four-week moving average dropped 1.1pts to 72.1pts.
• ‘Weekly inflation expectations’ eased 0.4ppt to 5.7%, while the four-week moving average ticked down 0.1ppt to 6.0%.
• ‘Current financial conditions’ (over the last year) decreased 2.0pts, and ‘future financial conditions’ (next 12 months) declined 5.1pts.
• ‘Short-term economic confidence’ (next 12 months) rose 0.5pts, while ‘medium-term economic confidence’ (next five years) fell 0.9pts. 
• The ‘time to buy a major household item’ subindex increased 0.3pts. 

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ANZ Economist, Sophia Angala, commented:

Last week, ANZ-Roy Morgan Australian Consumer Confidence fell to its lowest level since late May. The decline was led by weaker confidence in personal finances, which may have been influenced by expectations of a potential rate hike ahead of this week’s RBA meeting. Despite the recent rise in petrol prices alongside higher oil prices, inflation expectations eased over the week, although they remain elevated compared to the beginning of the year.

We expect the RBA to raise the cash rate in September and November, taking it to 4.85%, its highest level since 2008. This will likely weigh on household spending growth over the near term.

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