Consumer confidence falls on inflation fears

Australians are becoming more concerned about inflation, which could have repercussions for the economy.

In news that will worry the Reserve Bank of Australia (RBA), new ANZ-Roy Morgan survey data shows consumers expect inflation to lift by 0.4 percentage points to 5.2 per cent.

Meanwhile consumer confidence was muted at 84.5 points, as higher inflation and rising unemployment weighed on households.

High inflation expectations and weaker job prospects can be problematic for the RBA, as people change their behaviour.

They could ask for a larger pay rise, bring forward purchases to escape higher inflation rates or even slow down their spending if they are worried about their job.

The number of Australians saying now is a good time to make a major purchase dipped to 85.6 points.

ANZ economist Sophia Angala said last week’s stalling in annual disinflation likely supported Tuesday’s jump in inflation expectations.

“ANZ-Roy Morgan Australian Consumer Confidence has been trending down recently across

all housing cohorts, with renters currently facing the lowest confidence levels,” she said.

“This is in contrast to the rate-hiking period when homeowners with mortgages had the lowest average confidence level.”

Short-term economic confidence for the next 12 months is also down 3.2 points and medium-term confidence for the next five years slipped a further 2.5 points.

Confidence has now fallen below 85 points.

This is well below the monthly average since 1990 of 109.3 points.

Trimmed mean inflation for the last quarter was 1.0 per cent, above the RBA’s expectations.

This left the annual rate at 3.0 per cent – above market expectations of 2.8 per cent.

The more volatile headline inflation rate was 1.3 per cent in September 2025, up from 0.7 per cent in the June quarter. This was the highest quarterly rise since March 2023.

Headline inflation was 3.2 per cent for the year.

Australia’s unemployment rate has also reached a four-year high at 4.5 per cent.

EQ Economics and Judo Bank chief economic adviser Warren Hogan said the best-case scenario for mortgage holders would be if rates were left on hold on Tuesday.

“Thinking the next move in interest rates is down is completely inappropriate, as inflation heads above the RBA target band and also the economy grinds out a recovery,” he told Sky News.