CANBERRA, AAP – The latest COVID-19 lockdown has again unnerved Australians fearing another outbreak at a time of uncertainty surrounding new strains of the virus.
The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – fell 1.4 per cent.
The survey was taken at the weekend when metropolitan Perth and neighbouring regional Peel were under a three-day lockdown.
While the lockdown ended on Monday night, WA Premier Mark McGowan is keeping some restrictions in place, including mask wearing, for the next few days.
Unsurprisingly, sentiment among consumers in Perth tumbled 8.2 per cent, but other major cities were also under a cloud – Brisbane down 4.9 per cent, Melbourne off 4.4 per cent and Sydney dropping 3.6 per cent.
“We know, however, from previous experience that a quick resolution of the lockdown will see sentiment – and spending – rebound very quickly,” ANZ head of Australian economics David Plank said.
Even so, Commonwealth Securities senior economist Ryan Felsman said speeding up Australia’s vaccination rollout is key to future economic activity.
“Until then, we remain vulnerable to virus outbreaks and government containment measures,” he said.
Despite the latest fall, the confidence index remains above its weekly average for 2021 and is close to the long-run average.
This gauge of confidence recently struck a 19-month high after making a rapid recovery in the past year, having slumped in response to the first recession in nearly 30 years.
The upbeat mood has resulted in increased retail spending, which some economists expect will be the mainstay of economic growth this year.
The latest survey found the ‘time to buy a major household item’ component rose 0.9 per cent, despite an otherwise gloomy report.
One ongoing positive for confidence will be record low interest rates, which appear to be set in stone for several years.
On Wednesday, the latest consumer price index for the March quarter is expected to show a solid rise in inflation due to higher petrol prices, the rising cost of home building and an increase in rents.
Economists expect CPI to have risen by 0.9 per cent for the first three months of the year.
While this will lift the annual rate to 1.4 per cent from 0.9 per cent as of the end of 2020, it is still way short of what the Reserve Bank wants to see before it starts to consider lifting interest rates.
The central bank has an inflation target of two to three per cent.