The ANZ-Roy Morgan Consumer Confidence Index increased 2.3% this week after average petrol prices dropped by around 30 cents a litre. Consumer confidence had fallen for three straight weeks before this week’s increase, but despite the increase the index is still 14.3% below the same week a year ago.
Current and future financial prospects all declined with fewer Australians expecting to be better off over the next 12 months.
However, household purchase intentions did improve slightly, with 32%, up 2%, saying now is a good time to buy a major household item.
Inflation expectations (IE) dropped 0.6% along with the sharp drop in petrol prices, which could explain much of the lift in sentiment. Although the focus on relieving cost of living pressures in the Federal Budget may have played a part, ANZ head of Australian Economics, David Plank said.
“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% 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,” Plank said.