The weakness in consumer confidence presents a growing near-term risk to the outlook for household spending. Increasing petrol prices have had a sharp impact on households’ confidence.
Constantly rising gasoline prices pushed inflation expectations to 6%. Australian household sentiment slumped to the lowest since September 2020.
A statement Tuesday showed Sub-indexes on current financial conditions fell 5.4% and future financial conditions fell 4.6%, respectively.
Australia & New Zealand Banking Group Ltd.’s gauge of consumer confidence dropped 4.8% to 91.2 points in the week to March 20.
Private consumption has been a defense mechanism of the nation’s A$2.2 trillion economy, accounting for more than half of output, and economists expect next week’s budget to focus on easing pressure on households caught between accelerating inflation and still tepid wages growth.
With unemployment down to 4%, and job advertisements surging, the survey result is a sharp contrasts with Australia’s booming labor market that, together with faster inflation, has most economists predicting the central bank will raise interest rates in August.
In light of recent events and information acquired over the last few weeks traders expect the RBA to hike up interest rates in June.
