SYDNEY — Australian consumer confidence sank 4.5% last week to the lowest level since April 2022 after the Reserve Bank of Australia raised official interest rates by a further 50 basis points.
The fall in confidence more than offset the gains over the previous three weeks, according to a survey by the ANZ Bank and pollster Roy Morgan.
The RBA delivered 175 basis points in official interest rate hikes in less than 100 days with more hikes expected over the remaining months of this year.
The five confidence subindices declined.
Sentiment toward current financial conditions dropped 1.9% over the week, while future financial conditions decreased 5.5%. Current economic conditions plunged 10.2%, falling to its lowest level since September 2020, the survey showed.
ANZ head of Australian Economics David Plank said demand for housing has been dropping, along with house prices. That and rising interest rates caused confidence among homeowners to drop 7% last week.
But even as confidence has fallen, household spending has been robust, with strong employment gains, high levels of household saving and a desire to travel more than offsetting concerns about the rising cost of living, Plank noted.
“It remains to be seen whether this divergence between confidence and spending can continue,” he added. “We expect employment to remain robust through 2022 and wages growth to pick up. This may be enough to keep households spending, even if they feel wary about the outlook.”