Consumer confidence: Trading down

• After two straight weekly gains, consumer confidence fell by 2.3% last week. All the subindices were in the negative except ‘Future economic conditions’. 
• Current financial conditions were down by 4.3%, while future financial conditions fell 1.9%. Despite the fall, both the components are comfortably above their long-run average.   
• Economic conditions were mixed, with current economic conditions taking a big hit of 6.1% and more than reversing the prior week’s big jump, while future economic conditions gained 3.8%.
• The ‘time to buy a major household item’ index fell 2.6%. The four-week moving average for inflation expectations was down by 0.1ppt to 4.0%, and the weekly reading, which was showing signs of stability, tumbling to 3.7%. 

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ANZ Head of Australian Economics, David Plank, commented: “Renewed trade war tensions and the related equity weakness seemed to have negatively impacted consumer sentiment, with the drop over the past week driven by big falls in perceptions of current financial and economic conditions. Both remain comfortably above their long-term averages, however, most likely boosted by interest rate and tax cuts. Weekly inflation expectations fell to 3.7%, the weakest result since the end of June and a disappointing print from the RBA’s perspective especially given the lift in headline inflation in the Q2 CPI. Inflation expectations can be volatile from week-to-week, so we need to get a few more readings before we can determine whether this is a renewed downtrend.” 

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