Australians have never felt worse about their financial situation as they face a double whammy of rising interest rates and higher fuel costs.
ANZ-Roy Morgan figures show consumer confidence has collapsed to its lowest level since the research began in 1973.
Consumer confidence fell 5.4 points last week to 63.1 points. The four-week moving average fell 4.3 points to 70.5 points.
Australians now feel lower about their finances than during previous recessions, including the 1970s oil shocks, the dot-com bubble burst, the global financial crisis and the Covid downturn.
A score of 100 or above suggests households are optimistic about the future.
ANZ economist Sophia Angala says consumer sentiment has been hammered by a combination of soaring oil prices from the Middle East conflict and the RBA’s decision last week to increase the cash rate to 4.10 per cent.
”With very large increases in petrol prices through March, inflation expectations rose to its highest last week,” she said.
“Household confidence in their current and future finances weakened sharply, as did the ‘time to buy a major household item’ subindex, which is at its lowest since late March 2020 when pandemic lockdowns were announced.”
Ms Angala says households are worried about further mortgage pressures.
“Concerns around upside inflation risks and urgency to keep inflation expectations anchored are likely to support a final 25 basis point rate hike by the RBA in May, taking the cash rate to 4.35 per cent,” she said.
At a press conference last week, NewsWire asked RBA governor Michele Bullock about cratering consumer confidence.
Ms Bullock said Australians were continuing to spend despite faltering consumer confidence.
“It all depends on how confidence flows through into what people actually do in terms of spending,” she said.
“Confidence has been low for some time, but the consumers have been continuing to spend.
“So, yes, we look at consumer confidence, but ultimately what matters is what people actually do and that’s what matters for demand.”
She also said the RBA was yet to see any impact from AI on the unemployment rate despite high-profile lay-offs in the tech industry raising “doomsday” predictions.
“We’re not seeing it show up in things like the forward looking indicators like vacancies, job openings, lay-offs, those sorts of things,” she said.
“That’s something that has to be addressed more by government policies and how to retrain people.”
