Consumer confidence drops fast

Consumer confidence dropped 5.2 per cent last week, its sharpest weekly fall since late March 2020. The fall follows the extension and tightening of the Sydney lockdown and the fifth lockdown in Melbourne. While the decline was sharp, confidence is still well above the levels seen through the first phase of the pandemic in 2020.

Four out of five of the subindices fell significantly. ‘Current financial conditions’ was the only component to register a gain of 1.2 per cent, while ‘future financial conditions’ lost 3.4 per cent.

‘Current economic conditions’ dropped 7.9 per cent, while ‘future economic conditions’ decreased by 4.5 per cent.

‘Time to buy a major household item’ plunged 10.5 per cent. ‘Weekly inflation expectations’ increased by 0.1ppt to 4.2 per cent, keeping the four-week moving average steady at 4.1 per cent.

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"Consumer confidence fell by 5.2 per cent as the lockdown in Sydney was tightened and extended and another lockdown was imposed in Melbourne." ANZ Head of Australian Economics, David Plank said.

"Confidence actually dropped the most in Adelaide (-9.5 per cent) and Perth (-8.2 per cent) and was also down sharply in Sydney (-4.8 per cent) and Melbourne (-3.7 per cent)."

"The subindices that capture economic conditions and ‘time to buy a major household item’ are at their worst levels since early November 2020, highlighting some renewed caution of households – albeit nowhere near the lows seen in the early stage of the

pandemic."

"The four-week moving average for inflation expectations has been at or above the 4.0 per cent mark for the past five weeks, cementing the return to pre-COVID levels."

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