Consumer confidence has plunged to the lowest level since the early days of the COVID-19 pandemic as a series of rapid-fire interest rate rises takes its toll on household budgets.
ANZ and Roy Morgan’s weekly measure of consumer sentiment sank 2.9 points last week to 77, well below the monthly average of 111.6 over the past three decades.
The weekly barometer is now at its lowest point since April 2020, when much of the nation went into lockdown for the first time.
The Reserve Bank’s 25 basis point cash rate hike in March likely influenced the 6.4 point drop in the “current financial conditions” sub-index, which hit its lowest point since 2001.
ANZ senior economist Adelaide Timbrell said mortgage holders remained the least confident of all housing cohorts, but sentiment in this group did recover 1.7 points after a sharp decline in the lead-up to the March cash rate decision.
“Those who own their home outright and renters reported sharp decreases of 4.1 points and 7.9 points respectively,” she said.
The central bank has been lifting interest rates since May 2022 in response to high inflation.
The consumer sentiment survey comes as separate research shows many Australian holidaymakers are reconsidering their travel plans due to the rising cost of living.
Research conducted by YouGov found that while 87 per cent of Australians planned to travel at some point this year, 83 per cent said they would need to rein in spending.
The rising cost of living and spiralling inflation has led to 48 per cent of people being less likely to travel overseas in the next 12 months, while 37 per cent are less likely to go interstate.
For those still travelling, almost half would book cheaper accommodation, while 36 per cent would take a shorter trip and one in 10 wouldn’t take out travel insurance.
The poll of more than 1000 people was commissioned by Southern Cross Travel Insurance, whose chief executive Jo McCauley said while COVID-19 disrupted travel in previous years, household budgets were now the dominant factor.
The ANZ-Roy Morgan consumer survey revealed the “future finances” gauge sank a notable 4.4 points, as did “future economic conditions”, which fell by 4.3 points.
“Current economic conditions” lifted a touch, as did “time to buy a major household item”.
“Weekly inflation expectations” lifted 0.5 percentage points to 5.7 per cent, with the four-week moving average remaining steady at 5.3 per cent.
© AAP 2023
