Consumer confidence falls in lead up to Budget

Consumer confidence has fallen almost 20% in a year, reaching levels not seen since Victoria’s second wave of COVID-19 in September 2020.

ANZ-Roy Morgan’s Consumer Confidence report was released in the lead up to the Federal Budget, showing consumer buying intentions had deteriorated in March to their lowest since September 2020.

ANZ head of Australian economics, David Plank, said: “Consumer confidence is very weak given the strength of employment, which we think is directly linked to concerns over cost-of-living pressures.

“It will be interesting to see whether the measures expected in the Federal Budget provide a boost to confidence.”

Just 30% of respondents said now was a ‘good time to buy’ major household items, while 42% said now was a ‘bad time to buy’, the most extreme levels for over 18 months.

But the details were mixed with ‘current financial conditions’ decreasing by 2.5%, its third consecutive weekly decline while ‘future economic conditions’ rose 1.2%, indicating more respondents are expecting to be ‘better off’ in the longer rather than short term.

Meanwhile consumer’s views of ‘current economic conditions’ had gained 6.1% after a 21.1% decline over the past five weeks, with ‘future economic conditions’ softening 0.6%.

“Inflation expectations surged 0.4ppt last week to a multi-year high of 6.4%, even though petrol prices declined slightly,” Plank said.

“Consumer confidence was essentially unchanged despite this, with a slight decline of just 0.1%. Within the detail, however, sentiment toward ‘current financial conditions’ dropped to its lowest since May 2020.”