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Highlights
- A study by Australia and New Zealand Banking Group Limited (ANZ) and Roy Morgan Research unveils that Australia’s consumer confidence fell by 4.8% to 91.2 points in the third week of March.
- Recent geopolitical events have pushed the inflation expectations to 6%, a level not seen since 2011.
- Following the consequences of the market status, the Australian and New Zealand Dollars have also taken a step back.
- Now it is to be seen how the Federal Government deals with helping Aussies lower their household cost of living pressures in the upcoming federal budget.
A recent study released by Australia and New Zealand Banking Group Limited (ANZ) and Roy Morgan Research has showcased that Australian consumers are under high pressure. Australian consumer confidence has plunged amid the rising tensions between Russia and Ukraine, the global supply chain woes, inflation, flooding, to name a few. There is a herd of reasons why the Australian consumer is being crushed under the burden of market forces.
First things first, consumer confidence measures the degree of confidence/ optimism that consumers feel about the overall state of an economy, as well as their own financial condition.
Weekly ANZ-Roy Morgan consumer confidence index report
In collaboration with the Roy Morgan Research Institute, multinational banking and financial services company ANZ has released a survey report stating that Australian consumer confidence has plunged to the lowest level since September 2020, when the second wave of Covid-19 hit Victoria.
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Source: © Imageegami | Megapixl.com
According to the report, the confidence fell by 4.8% to 91.2 points in the third week of March. The primary cause for the falling consumer confidence in Australia can be attributed to the high inflation rate. Notably, recent geopolitical events have pushed the inflation expectations to 6%, a level not seen since 2011.
Besides, current financial conditions have plunged by 5.4%, and future financial conditions may fall by 4.6%. Following the consequences of the market status, the Australian and New Zealand Dollars have also taken a step back. The present consumer confidence is below 19.7pts from the same week a year ago. Additionally, the current confidence is even lower than the 2022 average of 99.7.
What does the report indicate?
According to several economists, even though the employment level in the country is rising, consumer confidence still falls. Why? - Because the nominal wage growth lags the jump in inflation; thus, high pressure on consumer budget prevails.
Low consumer confidence increases the risk of lower consumer spending, which is harmful to an economy that is on the voyage to recover from the pandemic and other economic crises. Additionally, the consistent increase in petrol prices is causing a high inflation rate, which causes a fall in consumer confidence and financial stability both in the present and the future scenarios.
How to make sense of the Inflation data?
As the survey further showcases, only 23% of Australians say their families are financially “better off” than this time last year, and about 36% of the Aussies say their families are financially “worse off”. Additionally, only 9% of the Australians say they expect “good times” over the upcoming twelve months and about 34% expect “bad times”.
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It will be interesting to now see how the Federal Government deals with helping Aussies lower their household cost of living pressures in the upcoming federal budget.
