Consumer confidence rise (after Q2 CPI)

Rise (after Q2 CPI)

• Consumer confidence rose 3.5 points last week to 74.7 points. The four-week moving average was unchanged at 74.2 points.
• ‘Weekly inflation expectations’ fell 0.4 percentage points to 5.5 per cent, while the four-week moving average was unchanged at 5.7 points.
• ‘Current financial conditions’ (over the last year) increased 1.3 points, and ‘future financial conditions’ (next 12 months) jumped 6.9 points.
• ‘Short-term economic confidence’ (next 12 months) lifted 1.9pts, while ‘medium-term economic confidence’ (next five years) was up 2.9 points.
• The ‘time to buy a major household item’ subindex gained 4.9 points. 

ANZ Economist, Sophia Angala, commented:

ANZ-Roy Morgan Australian Consumer Confidence rose 3.5pts last week, with all

subindices higher. The improvement was led by greater confidence in personal finances over the next year. The lift in confidence and decline in weekly inflation expectations may have been influenced by last week’s Q2 inflation data, which showed trimmed mean inflation, the RBA’s preferred measure of underlying inflation, came in below the RBA’s expectations. This supports our view that the RBA will leave the cash rate unchanged at its August meeting.

However, we continue to see a risk of a rate hike in November. On a four-week moving average basis, inflation expectations remain elevated compared to the beginning of the year. The renewed escalation of conflict in the Middle East will likely keep the RBA alert to upside inflation risks.