Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Australians are worrying about cost of living pressures, fuelled by a jump in petrol prices to record highs, which may curb their future spending habits.
The weekly ANZ-Roy Morgan consumer survey found inflation expectations for the next two years jumped 0.3 percentage points to five per cent, the highest level since December 2014.
“The rise in average petrol prices of more than 10 per cent nationally in the past two weeks likely had an impact on household perceptions of price increases,” ANZ head of Australian economics David Plank said.
In the past week alone, the Australian average for unleaded petrol rose 8.8 cents per litre to a record of 169.5 cents.
Inflation expectations provide an indicator as to where price pressures may be heading, and can be used in setting prices and wages.
Commonwealth Securities senior economist Ryan Felsman believes households are also worrying about higher food prices, elevated utilities bills and annual insurance premium hikes.
“Rising costs of inputs and production, due to supply chain disruptions and labour shortages, could eventually lead businesses to pass-on these higher costs to consumers through price hikes,” Mr Felsman warned.
“Rising consumer inflation expectations could potentially dampen confidence with households reluctant to spend in the near-term, delaying ‘big-ticket’ purchases.”
Rising fuel costs are expected to feature in Wednesday’s release of the consumer price index for the September quarter.
Economists’ forecasts point to a 0.8 per cent rise in the quarter for an annual rate of 3.1 per cent, compared with the Reserve Bank of Australia’s two to three per cent inflation target.
However, underlying inflation – which smooths out excessive price swings and is more linked to interest rate decisions made by the RBA – is likely to remain subdued and below the target band.
Predictions centre on underlying inflation rising 0.5 per cent in the September quarter to 1.9 per cent annually.
Meanwhile, confidence among Melburnians rose 1.2 per cent, and across Victoria by 1.5 per cent, as the state reopened after more than two months of lockdown trying to contain the coronavirus.
However, there was a mixed picture across the rest of country, resulting in a 0.2 per cent decline in the consumer confidence index, and ending a six-week run of gains.
Consumer confidence is a pointer to future household spending.
Commonwealth Bank of Australia’s weekly credit and debit card spending data shows a rebound in spending as restrictions ended in NSW, Victoria and the ACT.
National spending rose three per cent for the week ending October 22, with a seven per cent lift in NSW and a two per cent increase in Victoria.
CBA chief economist Stephen Halmarick said national spending growth had now recovered to be only slightly below the pace recorded prior to the lockdowns.
Rising vaccination rates are also pointing to a faster-than-expected recovery, he said.
Across Australia more than 87 per cent of the eligible population aged over 16 have now had their first COVID-19 jab, while more than 74 per cent are fully vaccinated with two doses.