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Consumer Confidence Rises After “Misplaced” RBA Commentary

Consumer confidence has risen by 0.4 per cent this week, although analysts warn this may be due to misplaced belief the RBA will slow interest rate rises.

The ANZ-Roy Morgan Consumer Confidence was up by 0.3 points to 86.0 this week. While this is up by 17.3 points on the same week a year prior, confidence is still 4.9 points below the weekly average for 2022.

On a State-by-State basis, NSW, Queensland and WA saw confidence rise, with Victoria down slightly.

Just 23 per cent of Australians say their families are ‘better off’ financially than this time last year, with only 7 per cent of Aussies expecting ‘good times’ for the Australian economy over the next twelve months.

42 per cent say their families are ‘worse off’ financially, with 35 per cent expecting bad economic times over the next year.

ANZ Head of Australian Economics, David Plank points out the 0.4 per cent lift in confidence may have almost reversed last week’s 0.5 per cent decline, but it is misguided.

“When we look at consumer confidence by housing status the confidence of people paying off their mortgage is greater than those renting for the first time since the RBA started raising interest rates in May after confidence of renters dropped by 8.7 per cent last week,” he said.

“This may indicate that people with mortgages have taken comfort from recent commentary that the RBA might scale back the size of rate increases in October.

“We think that commentary is misplaced and expect another 50bp from the RBA in October. This might come as something of a shock for those with mortgages. Household inflation expectations jumped 0.3ppt to 5.6 per cent, its highest since mid-August.”

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