Australian consumer confidence experienced a decline in November, influenced by the Reserve Bank of Australia’s (RBA) decision to implement another policy rate increase at this month’s meeting. Despite this, Australian business confidence showcased resilience, rebounding from concerns about the economic outlook.
According to the National Australia Bank (NAB) survey, business confidence, a comprehensive measure encompassing sales, employment, and profitability, increased by one point to 13 points in October.
Contrastingly, a survey conducted by Westpac Banking Corp revealed a 2.6% drop in the Australian Consumer Confidence Index to 79.9 points. This decline indicates a prevailing negative sentiment among consumers, outnumbering those with a positive outlook.
Matthew Hassan, senior economist at Westpac, commented on the impact of the RBA’s interest rate hike in November, stating, “The RBA’s interest rate hike in November has exerted new pressure on household finances and raised concerns about the rising cost of living. Concerns that the RBA may raise interest rates further have influenced consumers’ purchasing attitudes negatively.”
The RBA Board of Directors, in its meeting on November 7, voted to raise the policy interest rate by 0.25% to 4.35%, marking the highest level in 12 years. The RBA emphasized that recently released data indicated persistently high inflation risks over an extended period.
Australia’s Consumer Price Index (CPI) displayed a 1.2% increase in the third quarter, surpassing analysts’ expectations of 1.1%. This followed a 0.8% gain in the second quarter of 2023, reflecting inflation derived from consumer spending.
As consumers grapple with these economic developments, the divergence in confidence levels between businesses and individuals underscores the complex challenges facing Australia’s economy. Policymakers and analysts will closely monitor these indicators for insights into the evolving economic landscape and potential policy adjustments.