Australian Consumer Confidence Stays Near Depressed Levels

what happened

According to a Newsmetry API report, Australian consumer confidence increased by 0.9 points last week to 68.0. The four-week moving average fell 1.5 points to 69.4, based on a survey conducted by ANZ Bank and Roy Morgan. Households continue to face pressure from rising mortgage repayments and broad cost-of-living increases.

ANZ economist Sophia Angala said confidence remains well below its long-run average, indicating that elevated interest rates and inflation are likely to restrain consumer demand in the near term. Weekly inflation expectations climbed 0.2 percentage points to 6.1%, while the four-week average rose 0.1 percentage points to 6.0%.

Markets are awaiting third-quarter inflation data at the end of this month. Traders see a strong probability that the Reserve Bank of Australia will deliver a fifth interest-rate increase this year in November. Rates are already at their highest level in 15 years, and some economists warn that another increase could push mortgage repayments as a share of household income to the highest level since the late 1980s. ANZ expects core inflation to exceed the RBA’s third-quarter forecasts.

why it matters

Weak confidence highlights the pressure that high rates and inflation are placing on household demand, while rising inflation expectations reinforce expectations of further RBA tightening. The report is therefore relevant for the Australian dollar and local bond yields.

instruments