The expectation of upcoming hikes in interest rates has caused confidence to fall significantly among households having a mortgage in recent months.
An index below 100 points means that pessimistic respondents outnumber optimistic ones in the monthly survey, which indicates a negative trend for future household spending.
The downturn in April comes after the index slumped 4.2 percent in March when consumers started to lose confidence due to worries about rising inflation and interest rates and the impacts of the flood crisis.
“There is further evidence that interest rates, inflation and weather continued to unnerve consumers in the current survey,” Westpac chief economist Bill Evans said.
At the same time, there was a 9.2 percent drop in the confidence index of respondents with a mortgage in April, and the proportion of consumers expecting interest rates to go up in the next 12 months increased to 70 percent from 67 percent in March.
In addition, 36 percent of consumers predicted interest rates to grow by more than one percentage point, up from 30 percent in March.
Westpac bank forecast that the Reserve Bank of Australia (RBA) would raise the cash rate this June after hinting at its readiness for a change in monetary policy in the latest board meeting.
“Once the tightening cycle begins, we expect a series of rate hikes in most months in 2022,” Evans said.
ANZ senior economist Catherine Birch expected that the consumer price index for the March quarter, which will be released on April 27, would indicate an annual inflation rate of 4.7 percent, up from 3.5 percent previously.
She also anticipated the annual underlying inflation rate, which measures the inflationary pressures in the economy that predominantly result from market forces, to soar to 3.4 percent from 2.6 percent.
“We still think the RBA will wait until June before lifting the cash rate. A big upward surprise could challenge this conclusion,” she said.
However, the high demand for staff was not translating into applications as the number of candidate applications per ad dipped 4.5 percent in March, showing a further sign of a tightening labour market.
During the month, jobs ads climbed five percent to the highest level in SEEK’s 25-year history and were 32.2 percent higher compared to a year earlier.
“While interest among candidates remains consistent, as indicated by candidate visits to the site staying strong, the low levels of applications per ad are not matching the persistent demand for talent,” SEEK ANZ managing director Kendra Banks said.
