Inflation Worries Grow as Consumer Confidence Falls in Australia

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Australians are becoming more worried about rising prices, with new data showing inflation expectations climbing to 5.2%, up 0.4 percentage points from the previous survey.

According to the ANZ-Roy Morgan Consumer Confidence Index, confidence remains weak at 84.5 points, well below the long-term average of 109.3. Rising inflation and unemployment, now at a four-year high of 4.5%, are weighing heavily on households.

Fewer people think it’s a good time to make major purchases, with that measure falling to 85.6 points.

ANZ economist Sophia Angala said the latest data likely reflects concerns after inflation failed to ease last quarter. Renters, she added, now report the lowest confidence levels of all housing groups.

Inflation data showed prices rose 1.3% in the September quarter, the biggest jump since March 2023. The annual rate now stands at 3.2%, above both market and RBA expectations.

Economists warn the Reserve Bank of Australia (RBA) faces a tough challenge. High inflation expectations may push workers to demand higher wages or spend faster before prices climb further — trends that can make inflation even harder to control.

Warren Hogan, chief economic adviser at EQ Economics and Judo Bank, said keeping interest rates steady would be the best outcome for mortgage holders, but a rate cut is unlikely as inflation remains above target.

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