Australia: Consumer confidence weakens as tax concerns and rising petrol prices weigh
March 9, 2011
The index of consumer sentiment, published by Westpac and the Melbourne Institute, weakened from 106.6 points in February to 104.1 points in March, surprising market analysts, who had the index rising after the negative impact of the floods dissipated. At the current level, the index remains above the long-term average level of 100 points but is at its lowest level since June 2010. The monthly decrease in consumer sentiment came despite the pause in the monetary policy tightening cycle and favourable labour market conditions. According to the survey, the decline in consumer confidence can be attributed to budget and tax concerns, as the government considers the introduction of a carbon tax. In addition, expectations of further increases in oil prices, already pushed higher by the ongoing political turmoil in the Middle East and North Africa region, represented a drag on sentiment. Against this backdrop, households' assessment of their current financial situation worsened and they are less likely to purchase durable goods compared to the previous month.
Author: Armando Ciccarelli, Head of Data Solutions