In the week leading up to the Reserve Bank meeting on interest rates, the ANZ-Roy Morgan Consumer Confidence Index fell by 1.6 points to 85.1, marking the lowest level so far this year.
This decline is largely attributed to increased pessimism about personal finances and the broader Australian economy over the coming year.
Following the data release, the Reserve Bank (RBA) cut interest rates, lowering the OCR by 25 basis points to 4.1% from the previously held rate of 4.35% since November 2023.
Despite the weekly decline, consumer confidence remains 2.3 points higher than the same week last year but is 1.6 points below the average for 2025.
This fluctuation reflects ongoing uncertainty and varying economic forecasts impacting public sentiment.
The drop in consumer confidence was not uniform across all states.
Victoria, Western Australia, and South Australia saw decreases, while confidence levels in New South Wales remained stable and Queensland experienced gains, ANZ-Roy Morgan data showed.
The principal factors contributing to the drop in consumer confidence include a notable decline in optimism about current and future financial conditions.
Twenty per cent of Australians feel financially better off than last year, but 50% – a peak for this year – report being worse off.
Only 32% anticipate an improvement in their financial situation over the next year, a decrease from previous weeks, while 31% expect it to deteriorate, reflecting heightened economic anxiety.
Expectations for the Australian economy over the next year have slightly worsened, with only 10% of Australians anticipating “good times” economically, contrasted by a growing number who foresee “bad times.”
However, the medium-term outlook showed a minor improvement in sentiment, with fewer people expecting “bad times” over the next five years, ANZ and Roy Morgan reported.
Intentions to purchase major household items have also declined, with only 24% considering it a good time to buy, the lowest level since the pre-Black Friday sales period.
Conversely, 45% believe it is a bad time to make significant purchases, indicating cautious consumer spending behaviour.
“ANZ-Roy Morgan Australian consumer confidence declined 1.6pts last week to 85.1pts, the lowest point in the year, so far,” said Sophia Angala (pictured above), ANZ economist. “The four-week moving average has remained within a tight 86.0-86.9pts range since the beginning of January.
This week’s decline was largely due to a fall in households’ confidence in their personal finances.”
Both short-term and long-term economic confidence remain above their averages from the latter half of 2024, despite the recent dip.
