The S&P/ASX 200 Index (ASX: XJO) was rising in early trading before taking a U-turn amid news that consumer confidence is weaker despite interest rates remaining on hold for three consecutive months.
The ASX 200 is currently down 0.48% or 34.5 points to 7,157.8 points in late morning trading.
Let's take a look at the numbers.
Two surveys show consumer confidence is lower
ANZ-Roy Morgan released its latest consumer confidence data this morning.
Consumer confidence fell 1.1 points over the past week to reach 77.6 points.
This sets a new record, with the confidence metric below 80 points for 28 consecutive weeks.
ANZ-Roy Morgan says confidence is now 8.1 points lower compared to the same time last year.
It's also below the 2023 weekly average of 78.1 points.
ANZ economist Madeline Dunk said:
The recent upswing in ANZ-Roy Morgan Consumer Confidence has hit a roadblock, with the index falling 1.1pts last week.
This is despite the RBA keeping the cash rate on hold at its September meeting, and the Q2 GDP data suggesting that Australia is on track for a soft landing.
Westpac Banking Corp (ASX: WBC) also released its own consumer confidence data at 10.30am.
The bank's survey also showed a 1.7% decline in confidence to 79.7 points in September.
According to The Australian, Westpac chief economist Bill Evans says there is persistent pessimism due to the impact of high inflation and the cost of living crisis playing out today.
What's the latest news on inflation?
The latest monthly Consumer Price Index (CPI) data was released by the Australian Bureau of Statistics (ABS) on 30 August.
As my colleague Bernd reported, the annual inflation rate fell to 4.9% in July. This compares to 5.4% in June and the peak rate of 8.4% recorded in December 2022.
Housing costs rose by 7.3% in July, making it the biggest contributor to inflation in July.
Dunk commented:
There was a sharp fall in confidence amongst renters last week.
And while consumer confidence remains lowest for those households with a mortgage, confidence amongst this group has lifted to its highest level in five months.
The federal Greens' call for a national rent freeze appears dead after they agreed to support Labor's $10 billion Housing Australia Future Fund in exchange for an extra $1 billion in public housing spending.
The Greens wanted national cabinet to agree to a temporary rent freeze in light of the fastest annual rent increases ever recorded across the combined capital cities.
What's the latest news on interest rates?
The Reserve Bank decided to keep interest rates on hold again at its meeting last Tuesday.
In a statement, the RBA explained its decision:
The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so.
In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month.
This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.
