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Confidence jumps as inflation expectations decline

Consumer confidence rebounded 2.5 per cent at the close of March as falling inflation expectations boosted sentiment.


Among the major states, confidence increased in Victoria, Queensland and South Australia, while it dropped in New South Wales and Western Australia.


The weekly inflation expectations index fell 0.6 percentage points to 5.8 per cent, driven by a sharp drop in petrol prices. The four-week moving average on this reading rose 0.2 per cent to 6.0 per cent.


All the confidence subindices registered gains. ‘Current financial conditions’ increased by 4.3 per cent, bouncing back from a 12.5 per cent decline over the past three weeks. ‘Future financial conditions’ rose 0.2 per cent.


‘Current economic conditions’ gained 4.7 per cent after a 6.1 per cent increase the week before. ‘Future economic conditions’ rose 1.0 per cent.


The ‘time to buy a major household item’ reading jumped 3.4 per cent, after a nearly 14 per cent decline over the past three weeks.



“Inflation expectations (IE) dropped 0.6 percentage points last week to 5.8 per cent as petrol prices dropped sharply,” ANZ Head of Australian Economics, David Plank, said.


“We think this explains much of the lift in sentiment, though the focus on relieving cost of living pressures in the Australian Federal Budget may also have played a part.”


“The fall in petrol prices is likely due to lagged effects of the drop in crude prices since March 8 which have declined by nearly 20 per cent since then.”


“The cut to petrol excise announced in the budget may, depending on volatile oil prices, see petrol prices drop further in the coming weeks. This could potentially lower IE and lift consumer sentiment further.”


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