Australian consumer confidence stays resilient, recent rise in inflation expectations likely to unwound

Australian consumer confidence remains resilient. In the week ended 29 January, the ANZ-Roy Morgan consumer confidence rose 0.9 percent to 118.1 after recording a 1.9 percent drop in the last week. The rise was mainly due to a rebound in current financial and economic conditions sentiment.

Household’s views towards their current finances rose strongly by 3.4 percent, whereas views towards future finances remained quite flat at 0.2 percent. Both the indicators stay quite above their long run averages.

Consumers’ views about economic conditions in the coming 12 months rose 5.4 percent, reversing the 2 percent decline in the previous week. This brings the index to the highest level seen in eight weeks. On the contrary, consumers’ views of economic conditions in the next five years recorded a drop of 3 percent.

The rebound after Christmas in consumer views on whether ‘now is a good time to buy a household item’ continued to unwind, with this sub-index down 0.4 percent in the week. Meanwhile, inflation expectations fell slightly last week, but the four week moving average rose to 4.5 percent, the highest value since December 2015. ANZ senior economist Felicity Emmett stated that the resilience of consumer sentiment in the midst of global political uncertainty is encouraging.

“Higher petrol prices have likely pushed inflation expectations up over recent weeks, but with last week’s CPI report suggesting that inflation is unlikely to turnaround sharply any time soon, we expect some of the recent rise in inflation expectations may be unwound”, added Felicity Emmett.

At 06:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at 9.0944, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -44.1711. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex