Australian consumer confidence is on the rise as the end of the year approaches, supported by continuous increases in house prices and the expectation that the Reserve Bank of Australia (RBA) will not further raise interest rates. According to a survey conducted by ANZ Bank and Roy Morgan, consumer confidence experienced a 1-point increase last week, with the four-week moving average for confidence up by 1.8 points.
ANZ Senior Economist Adelaide Timbrell commented on the state of consumer confidence, stating that it remains weak compared to the long-run average. However, recent increases in confidence can be attributed to homeowners and those paying off their homes, who may be buoyed by rising housing prices and the potential stability of interest rates.
While the RBA decided to keep the official cash rate unchanged at 4.35% this month, they have indicated that they may raise rates next year. Timbrell mentioned that confidence about future finances has exceeded the neutral level for the second time since January 2023.
However, Timbrell also acknowledged that there are limits to the overall increase in confidence, as households continue to face the impacts of rapid inflation. Renter confidence has been trending down, potentially due to low vacancy rates leading to stronger rent growth, among other rapidly rising living costs.
According to the data, weekly inflation expectations have increased by 0.3 percentage points to 5.3%, while the four-week moving average declined to 5.3% from 5.4%. On a positive note, consumers displayed increased optimism about purchasing major household items, with the measure rising by 3.1 points over the week.
The weekly ANZ-Roy Morgan Australian Consumer Confidence Rating is based on 1,507 interviews conducted online and over the telephone during the week ending on Sunday.