Consumers confidence falls as rates rise

Consumer confidence fell last week for a second week in a row, particularly for homeowners paying off a mortgage who are being hit by higher interest rates.

The weekly ANZ-Roy Morgan Australian Consumer Confidence Rating, based on 1,498 interviews during the week to Sunday, found consumer confidence fell 2.5 per cent to 81.6, well under the last three decade’s monthly average of 112.4.

Consumer confidence for those paying off a mortgage was down by a “sharp” 5.4 per cent, the survey found.

Since the talk of rate hikes began in late April, consumer confidence among mortgage holders has fallen 25 per cent, while confidence among renters is down four per cent.

Those saying it was time to buy a major household item decreased by 1.8 per cent.

Meanwhile, Commonwealth Bank’s Household Spending Intentions Index showed a modest 0.9 per cent rise in June to 117.3, but there was clear evidence of weaker discretionary spending.

The marginal rise in the index, which combines CBA payments and lending data and Google Trends search information, was mostly driven by the increased cost of goods and higher spending in transport, education and household service sectors.

“With further interest rate increases expected through the remainder of 2022, we would expect to see discretionary spending weaken further in coming months,” said CBA chief economist Stephen Halmarick.

The Australian Bureau of Statistics will release household spending figures for May after the previous monthly figures showed expenditure was up 7.6 per cent throughout the year.

The biggest increases were in spending on furnishings and household equipment.

The ABS will also release monthly figures for overseas arrivals and departures on Tuesday.

with AAP