Australian consumer confidence has shown no change in the past week, but there is a noticeable upward trend over the last month, suggesting growing confidence that interest rates have reached their peak and discussions will soon revolve around the prospect of rate cuts later this year. According to a survey conducted by the ANZ Bank and pollster Roy Morgan, consumer confidence has increased by 0.9 points in the last month.
ANZ senior economist Adelaide Timbrell noted that consumer confidence is currently higher than any time between February and December, with the Reserve Bank of Australia's first policy meeting for 2024 scheduled for February 6th. There remains a possibility that the RBA might raise the official cash rate by an additional 25 basis points to 4.60% at the meeting, particularly if next week's fourth-quarter inflation data show a decrease in price pressures as anticipated.
Households in Australia carry some of the highest debt burdens globally, and any increase in interest rates directly impacts their budgets due to the prevalence of variable rate mortgages. The survey revealed that weekly inflation expectations rose by 0.2 percentage points to 5.2% last week, with a four-week moving average increase from 5.1% to 5.2%.
While confidence in current financial conditions saw an increase of 3.2 points last week, future financial conditions experienced a slight decline of 0.9 points but remained above the neutral 100 level. The assessment of current economic conditions decreased by 2.0 points, and there was also a 0.9-point decrease in expectations for future economic conditions. However, the index for the time to buy a major household item rose by 0.7 points over the week.
The ANZ-Roy Morgan Australian consumer confidence rating is based on 1,492 interviews conducted both online and over the telephone during the week leading up to Sunday.
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