Small post-budget bump in consumer confidence

The ANZ-Roy Morgan Australian Consumer Confidence index recorded a small rise in the week of the federal budget, lifting the series above its 2024 low.

The budget contained a handful of measures aimed at helping households with cost-of-living pressures.

ANZ Research will be watching the index to see how consumers respond to those measures, along with the Stage 3 tax cuts, to gauge what households might do with the extra money in their pockets.

If consumer confidence rises materially in the short term, spending might pick up as well. On the flipside, households could remain cautious and save the money freed up by the tax cuts and budget measures.

The household response will be important for what happens to the cash rate in 2024.

ANZ Research’s current view is the RBA will start easing rates in November. However, there is a risk that rate cuts don’t begin until 2025.

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Bump

The post-budget boost in ANZ Roy Morgan Consumer Confidence was driven by a rise amongst renters, which increased to its highest level in about a year. This could be linked to some of the measures announced in the budget, particularly the 10 per cent rise in Commonwealth Rent Assistance.

The response across other household groups was more muted. Confidence amongst those paying off a home loan increased a touch but fell slightly for those people who own their home outright.

The overall level of consumer confidence is still very low, reflecting the ongoing impact of cost-of-living pressures. Mortgage payments have risen sharply and tax payments are taking a chunk out of people's incomes.

The big question is whether there will be a shift in consumer confidence through 2024.

Madeline Dunk is an Economist at ANZ