Consumer confidence edged lower in the past week in response to the Reserve Bank of Australia raising the cash rate for the first time in more than a decade, extending the steep drop of the previous week.
The weekly ANZ-Roy Morgan consumer confidence index – a guide to future household spending – declined a further 0.2 per cent to 90.5, remaining well below the monthly average of 112.4 stretching back to 1990.
This was the fourth consecutive decline and followed a six per cent tumble a week earlier, which was in a response to a spike in the rate inflation to its highest level in over 20 years.
“This suggests that consumers had anticipated the likely increase in interest rates by the RBA,” ANZ head of Australian economics David Plank said of the latest result.
However, confidence among people who are paying off their home loan tumbled by five per cent, reinforcing the 9.6 per cent drop in the previous week.
This was partially offset by the increase in confidence for those who already own their home or are renting, rising by 1.3 per cent and 2.6 per cent respectively.
Separately, the CommBank household spending intentions index fell by 3.8 per cent in April after reaching a record high in March.
The survey – which analyses CBA payments data, loan applications and publicly available search activity on Google Trends – found home buying, health and fitness, and transport spending led the falls in April, but were partially offset by gains in travel, entertainment and retail sectors.
“We are seeing a post-COVID normalisation of consumer spending patterns,” Commonwealth Bank senior economist Belinda Allen said.
The National Australia Bank will also issue its monthly business survey for April later on Tuesday.
At the same time, the Australian Bureau of Statistics will release retail sales figures for the March quarter.
Economists’ forecasts point to a one per cent rise in the quarter after the 8.2 per cent surge in the December quarter, which was the result of a strong rebound from the COVID-19 Delta variant lockdowns.
During the March quarter, consumers endured the Omicron outbreak, floods along the east coast and a surge in fuel prices.
While the federal government has since tried to ease cost of living pressures by cutting fuel excise in the March budget, petrol prices are rising again due to increasing crude oil prices.
The Australian Institute of Petroleum said the national average for petrol prices rose by a further 1.4 cents to 179.6 cents per litre in the past week, the third consecutive weekly rise.
