Last week, Australian consumer confidence took a hit, potentially in response to the weakening Australian dollar, which is under pressure due to concerns about China’s economy.
According to a survey conducted by ANZ Bank and pollster Roy Morgan, consumer confidence decreased by 2.4 points last week.
The recent softness in the Australian dollar may have also led to an increase in weekly inflation expectations. As per the survey, it rose by 0.3 percentage points to 5.5%, while the four-week moving average remained steady at 5.4%.
The Australian dollar has gained significant attention lately as global financial markets eagerly await news on a possible economic stimulus package in China. Such a package could potentially boost the economy and provide some relief for the Australian dollar.
Kristina Clifton, currency strategist at the Commonwealth Bank of Australia, warned that there is a growing risk of the Australian dollar dipping below 60 U.S. cents before the year-end (currently around 64 U.S. cents), emphasizing the need for a substantial Chinese stimulus package focused on commodity-intensive infrastructure spending to reverse the downward trend.
The sentiment around current financial conditions declined by 1.1 points, while future financial conditions were down by 4.2 points after a notable 7.6-point increase in the previous week.
In terms of current economic conditions, there was a decline of 3.6 points over the course of the week.
Nevertheless, there was a slight improvement in consumer sentiment regarding the purchase of major household items, with the indicator rising by 0.2 points following a cumulative fall of 4.5 points over the previous two weeks.
Adelaide Timbrell, ANZ Senior Economist, mentioned that the four-week moving average of the consumer confidence index continued to show an upward trend.
Among housing cohorts, which are highly sensitive to changes in interest rates, confidence fell among outright homeowners and renters, while it remained almost unchanged for those in the process of paying off their homes, according to the survey.
The weekly ANZ-Roy Morgan Australian Consumer Confidence Rating is based on 1,503 interviews conducted online and over the telephone during the week ending Sunday.