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Consumer confidence rises as lockdowns end, petrol at a 13-year high

Business

Consumer confidence has risen for a sixth straight week, buoyed by the reopening of Greater Sydney after its lengthy coronavirus lockdown, the imminent end of Melbourne’s restrictions and a roadmap out of border closures in Queensland.

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The ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – increased 1.3 per cent in the past week.

Confidence has now risen seven per cent since early September and now stands at its highest level since early July.

Confidence jumped 5.4 per cent in Melbourne, which is due to start easing restrictions on Friday and earlier than anticipated.

“Australians can look forward to a bright summer. Australians know that their economy is resilient in the face of this big economic shock,” Treasurer Josh Frydenberg told parliament on Monday.

Confidence aside, consumer inflation expectations held steady at a four-week moving average of 4.8 per cent, the highest level since 2014, and having recently risen in tandem with petrol prices.

The national price for unleaded petrol rose by a further 6.9 cents per litre on average in the past week to 160.7 cents – a 13-year high.

Rising fuel costs are expected to have been a key driver of inflation when the September quarter consumer price index is released next week.

ANZ economists upgraded their CPI forecast to 0.9 per cent for the quarter and 3.1 per cent annually following New Zealand’s much stronger than expected inflation result, which was released on Monday.

ANZ had previous predicted a quarterly rise of 0.7 per cent and 2.9 per cent on the year.

NZ inflation soared by 2.2 per cent in the September quarter for 4.9 per cent annually – the strongest pace since 2011.

Economists expect this will force the Reserve Bank of New Zealand to raise its key interest rate again in November.

It has also raised expectations that the Reserve Bank of Australia could raise the cash rate earlier than expected.

Such dynamics won’t be captured when the RBA releases the minutes of its October 5 board meeting later on Tuesday.

RBA governor Philip Lowe’s post-meeting statement largely stuck to the script that the central bank won’t lift the cash rate until inflation is sustainably within its two to three per cent target, a condition it does not expect to occur before 2024.

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