CANBERRA, AAP – The mood among Australia’s consumers remains largely positive, a sign that retailers could enjoy a rapid recovery in spending once coronavirus restrictions ease in coming months.
However, the latest weekly ANZ-Roy Morgan consumer survey also showed inflation expectations have nudged higher again.
Consumer inflation expectations edged up to 4.8 per cent in the past week, lifting the four-week moving average to 4.7 per cent, its highest level since 2014.
“High inflation expectations at a time of weak wage growth could drag on overall consumer confidence if people start to worry about the cost of living,” ANZ head of Australian economics David Plank said.
The recent rise in petrol prices to close to three-year highs is one factor that could be troubling people’s views.
Still, the consumer confidence index – a pointer to future household spending – rose 0.4 per cent and to its highest level since mid-July.
Confidence among Sydneysiders sneaked 0.1 per cent higher as COVID-19 cases begin to decline, but fell 0.9 per cent among Melburnians.
Mr Plank said given the Victorian capital faced rising virus infection numbers, tremors from a 6.0 magnitude earthquake and violent anti-lockdown protests, sentiment held up reasonably well.
However, the economic damage caused by lockdowns in Australia’s two most populous states and its capital will be reflected in the latest retail spending figures due later on Tuesday.
Economists’ forecasts centre on a two per cent decline in the August retail trade figures which are due to be released by the Australian Bureau of Statistics.
Predictions range from a 1.5 per cent fall to a four per cent slump.
Spending has been declining since June, when it dropped by 1.8 per cent, followed by a 2.7 per cent fall in July, as states and territories swung in and out of lockdown.
Such results are fuelling expectations of a sharp contraction in the economy of as much as four per cent in the September quarter given household spending accounts for about 60 per cent of economic growth.
St George economist Matthew Bunny said spending patterns over recent months had been consistent with previous lockdowns.
“There have been double-digit falls across clothing, footwear and personal accessories, cafes, restaurants and takeaway food services, and department stores,” he said.
“Meanwhile, food spending has increased as people are forced to spend more time at home and stock up on essential goods.”