Consumer confidence has tumbled to its lowest level in months following snap coronavirus lockdowns across the country, spelling trouble for retailers.
The weekly ANZ-Roy Morgan consumer confidence – a pointer to future household spending – has dropped 3.9 per cent.
Confidence in Sydney, which remains in a 14-day lockdown, slumped 8.9 per cent, while there were also also declines in most other cities, including in areas not directly affected by restrictions.
“With the lockdowns in Brisbane and Perth coming to an end, we can expect confidence, and consumer spending, to rebound reasonably quickly given past experience, ” ANZ economist David Plank said.
“But much will depend on whether restrictions in Sydney are able to be eased.”
The Sydney lockdown is due to end on Friday but could be extended.
The economic impact of the nation’s ongoing battle with the pandemic will form part of the Reserve Bank of Australia’s considerations when it holds its monthly board meeting.
The RBA is widely expected to keep its key cash rate unchanged at a record low 0.1 per cent, where it has stood since November last year.
The central bank has repeatedly said interest rates will not rise until inflation is sustainably within the two to three per cent target, which it does not expect to occur until at least 2024.
However, there is growing speculation among economists this could be brought forward to 2023 or even earlier given the strength of the economy, particularly in the labour market.
The RBA is due to make decisions on two policy tools that run alongside the cash rate – its three-year bond yield target and bond buying program – aimed at keeping market interest rates and borrowing costs low.
RBA governor Philip Lowe will hold a rare media conference after the board meeting to explain its actions and ensure the right message gets out on the interest rate outlook.
The Australian Bureau of Statistics will also issue its latest weekly payroll jobs report, which will cover the fortnight ending June 19.