Pullback
- Consumer confidence fell 1.9pts last week to 72.0pts. The four-week moving average dropped 1.4pts to 73.2pts.
- ‘Weekly inflation expectations’ rose 0.2ppt to 6.1%, while the four-week moving average was unchanged at 6.1%.
- ‘Current financial conditions’ (over the last year) increased 2.5pts, and ‘future financial conditions’ (next 12 months) decreased 0.8pts.
- ‘Short-term economic confidence’ (next 12 months) was down 5.5pts, while ‘medium-term economic confidence’ (next five years) declined 1.8pts.
- The ‘time to buy a major household item’ subindex eased 4.1pts.
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ANZ Economist, Sophia Angala, commented:
ANZ-Roy Morgan Australian Consumer Confidence remains around its recent lows, with last week’s pullback led by weaker confidence in the economic outlook. The recent re-escalation of conflict in the Middle East and sharp rise in oil and petrol prices may be weighing on confidence and keeping inflation expectations elevated, with the latter around its highest levels since late May on a four-week moving average basis.
RBA Governor Bullock noted in a parliamentary testimony last week that upside inflation risks appear to be materialising. With few signs of a resolution to the Middle East conflict over the near term, the RBA remains concerned inflation could prove more persistent. We now expect the RBA to increase the cash rate by 25bp in September, in addition to the 25bp rate hike we expect in November. Alongside the weak level of confidence, this is likely to soften spending growth over the near term.
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