August 09, 2022

ANZ-Roy Morgan Consumer Confidence drops by 3.8pts to 80.3 after RBA raises interest rates for fourth straight month

Topic: Consumer Confidence
Finding No: 9040
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ANZ-Roy Morgan Consumer Confidence was down 3.8pts to 80.3 this week and is now a large 18.3pts below the same week a year ago, August 7/8, 2021 (98.6). In addition, Consumer Confidence is now 11.6pts below the 2022 weekly average of 91.9 and is now at its lowest for over two years since early April 2020 during the early stages of the pandemic.

The fall in Consumer Confidence followed the RBA’s decision to increase interest rates for a fourth straight month, increasing the official cash rate by 0.50% to 1.85%. The official cash rate has now increased by 1.75% since early May – the fastest rate of increase since late 1994.

On a State-based level Consumer Confidence was down across all five mainland States this week with the largest falls in NSW, South Australia and Western Australia. This week’s fall was driven by increasing concern about the next 12 months both in terms of personal finances and the performance of the Australian economy over the next year.

Current financial conditions

  • Now 22% of Australians (down 1ppt) say their families are ‘better off’ financially than this time last year compared to 43% (up 1ppt), that say their families are ‘worse off’ financially.

Future financial conditions

  • Looking forward, fewer than a third of Australians, 29% (down 3ppts), expect their family to be ‘better off’ financially this time next year compared to 35% (up 3ppts), that expect to be ‘worse off’.

Current economic conditions

  • Only 6% (down 1ppt) of Australians expect ‘good times’ for the Australian economy over the next twelve months compared to 45% (up 6ppts), that expect ‘bad times’ (the highest figure for this indicator for nearly two years since September 2020).

Future economic conditions

  • In the longer term, just 14% (up 2ppts) of Australians are expecting ‘good times’ for the economy over the next five years compared to 22% (up 4ppts) expecting ‘bad times’.

Time to buy a major household item

  • When it comes to buying intentions now just 23% (unchanged) of Australians, say now is a ‘good time to buy’ major household items while 48% (up 3ppts), say now is a ‘bad time to buy’.

ANZ Head of Australian Economics, David Plank, commented:

Block Quote

Consumer confidence declined 4.5% last week, to its lowest levels since April 2020, as the RBA increased interest rates by 50bp for the third month in a row to 1.85%. Household inflation expectations increased 0.1ppt to 5.6% despite petrol prices falling for a fourth consecutive week. Demand for housing has been dropping, along with house prices. That and rising interest rates caused confidence among homeowners to drop 7% last week. So far in 2022, household spending has been robust despite very weak consumer sentiment, with strong employment gains, high levels of household saving and a desire to travel more than offsetting concerns about the rising cost of living. It remains to be seen whether this divergence between confidence and spending can continue. Certainly, we expect employment to remain robust through 2022 and wages growth to pick up. This may be enough to keep households spending, even if they feel wary about the outlook.”

Related Research Reports

The latest Roy Morgan Consumer Confidence Monthly Report is available on the Roy Morgan Online Store. It provides demographic breakdowns for Age, Sex, State, Region (Capital Cities/ Country), Generations, Lifecycle, Socio-Economic Scale, Work Status, Occupation, Home Ownership, Voting Intention, Roy Morgan Value Segments and more

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Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size Percentage Estimate
40% – 60% 25% or 75% 10% or 90% 5% or 95%
1,000 ±3.0 ±2.7 ±1.9 ±1.3
5,000 ±1.4 ±1.2 ±0.8 ±0.6
7,500 ±1.1 ±1.0 ±0.7 ±0.5
10,000 ±1.0 ±0.9 ±0.6 ±0.4
20,000 ±0.7 ±0.6 ±0.4 ±0.3
50,000 ±0.4 ±0.4 ±0.3 ±0.2

Related Findings

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