After posting a 1.9% fall last week, consumer confidence rose 0.9% to 118.1 in the week ending 29 January. The rise was primarily driven by a bounce in confidence in current financial and economic conditions.
Households’ views towards their current finances rose a solid 3.4%, while views towards future finances were broadly flat (+0.2%). Both indicators remain well above their long run averages.
Households’ views of economic conditions over the next 12 months jumped 5.4%, more than reversing the 2.0% fall last week, and bringing the index to its highest level in eight weeks. In contrast, households’ views of economic conditions over the next five years posted a 3.0% fall.
The post-Christmas bounce in household views on whether ‘now is a good time to buy a household item’ continued to unwind, with this sub-index down 0.4% in the week, although still high by recent standards.
Inflation expectations edged down last week, although the four week moving average rose to 4.5%, the highest value since December 2015.
ANZ SENIOR ECONOMIST FELICTY EMMETT COMMENTED:
“The resilience of consumer confidence amidst global political uncertainty is encouraging. In particular, sentiment around current financial and economic conditions has improved significantly since the sharp drop in the wake of the weak Q3 GDP report.
Importantly, households’ views of overall financial conditions as well as the ‘time to buy a household item’ index remain above their long term trends, suggesting a positive outlook for consumer spending.
Inflation expectations ticked down last week, following the weaker-than-expected Q4 CPI report. Higher petrol prices have likely pushed inflation expectations up over recent weeks, but with last week’s CPI report suggesting that inflation is unlikely to turnaround sharply any time soon, we expect some of the recent rise in inflation expectations may be unwound.”