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Highlights
- Consumer spending dropped to its lowest level since the Delta variant outbreak during the week ended 5 January.
- Consumers have taken a cautious approach without many restrictions being imposed from the government’s side.
- A shortage of workers is developing across the Australian supermarkets, with workers refusing to turn up for work.
Australia has started the new year with a somewhat slower momentum, as evident from weakening consumer confidence. The latest consumer spending data came as a surprise as consumer expenditure continued to strengthen throughout most of 2021. However, with rising cases of the new Omicron variant, the confidence of consumers and businesses has been shaken. This is evident in consumer spending figures released by ANZ, which have significantly dwindled in the first week of January 2022.
Consumer spending dropped to its lowest level since the Delta variant outbreak during the week ended 5 January 2022. The new virus has created precarious circumstances, much like the situation seen during the Delta outbreak. However, this time around, most citizens are fully vaccinated and there is greater awareness about the possible effects of the virus on the population.
ALSO READ: Why 2022 could be a bumpy ride for Australian economy?
Consumers treading cautiously
Medical experts have suggested that the new strain is milder and has a less severe impact on the population. However, the Omicron strain is labelled as a quickly spreading strain, prompting a mass number of infections in a short time.
Data released by Australia and New Zealand Bank reveals that spending in Sydney and Melbourne plunged to levels resembling harsh lockdown conditions seen last year during the first week of January 2022. Consumer spending primarily fell on dining and shopping, which have consistently been the most highly affected areas throughout the pandemic.
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Could self-imposed restrictions be more effective than lockdowns?
Surprisingly, the released figures resemble the conditions seen during 2021 lockdowns. Consumers have now become watchful and are more likely to embrace a cautious approach without much restrictions being imposed from the government’s side.
In a way, a growing trend has emerged where consumers have taken matters into their own hands while relying on their own decision making. However, an important factor here is that most consumers have been able to relieve their pent-up demand for shopping and dining around the new year time. Notably, the Christmas holidays were marked with phenomenal consumer spending and large crowd gatherings for celebration. One can say that holidays helped consumers take some solace while being confined to their homes.
On the flip side, as individuals are spending less time outdoors amid the Omicron variant, there is an acute shortage of workers developing across sectors. Most notably, a shortage of workers is developing across the Australian supermarkets as workers have been refusing to turn up for work. This has led to a delay in the fulfillment of orders of fresh fruit, meat, and toiletries. At a time when supply constraints have handicapped certain industries, the acute lack of workers could aggravate existing problems.
The following months could provide further clarity on how the Omicron variant takes shape. However, most individuals have taken a cautious approach till then, which may turn out favourable for the long run.
ALSO READ: The possible effects of Omicron in 2022
