CANBERRA, AAP – Australians appear to be over their jitters surrounding recent coronavirus outbreaks and have been buoyed by recent figures showing a further decline in the unemployment rate.
The ANZ-Roy Morgan consumer confidence index rose 2.3 per cent in the past week, recouping its losses seen either side of the Christmas and New Year holidays when parts of NSW and Brisbane were in COVID-19 lockdown.
ANZ head of Australian economics David Plank said the improvement in consumer confidence – a pointer to future household spending – comes on the back of further good news on the labour market front, notably the drop in the unemployment rate to 6.6 per cent in December.
“The absence of community transmitted COVID-19 cases for a number of days and the relaxation in border rules has likely also supported confidence,” Mr Plank said, releasing the index on Tuesday.
The National Australia Bank will release its monthly business survey later on Tuesday, which will give an indication of the mood of firms in the final weeks of 2020.
The December quarter consumer price index will also be released and is expected to show benign price pressures overall, with government stimulus measures keeping the lid on some categories.
Economists’ forecasts centre on a 0.7 per cent quarterly rise in the CPI, which will also keep the annual inflation rate at 0.7 per cent, well below the Reserve Bank’s two to three per cent target band.
Underlying measures of inflation – which smooth out wild price swings and are closely monitored by the Reserve Bank in terms of monetary policy – are also expected to remain subdued.
The impact of the coronavirus pandemic on prices has resulted in some extreme quarterly movements in the CPI over the past nine months.
However, the effects of COVID-19 on inflation are now subsiding, the Australian Bureau of Statistics said earlier this month, laying the groundwork for figures being published on Wednesday.
The ABS said government schemes introduced to support households hit by coronavirus, such as construction grants, would put some downward pressure on inflation figures for the December quarter.
The Reserve Bank has repeatedly said it will not raise the cash rate until inflation is sustainably within the target band, which is unlikely to happen before 2023.