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Cloudy outlook stifles consumer confidence

Michael Mehr
A poll suggests people feel less optimistic about how the economy will fare over the next 12 months

Consumer confidence slipped during the weekend according to an ANZ survey that suggests inflation expectations are at a three-month low amid concerns about the outlook for the Australian economy.

The ANZ-Roy Morgan Australian Consumer Confidence index fell 1.1 per cent from the previous week, with respondents' views of the economy over the next 12 months sliding 2.6 per cent and sentiment about conditions during the next five years dropping 4.9 per cent.

Perceptions about the economy over the forthcoming year were at the lowest levels since April 2017 and optimism about the five-year period sank to depths last recorded in October 2017.

The weekly measure of consumer mood, which is based on about 1,000 face-to-face interviews conducted on Saturdays and Sundays, also registered a 0.3 per cent increase in people who said they felt better off now compared with a year ago.

People's sense of optimism about the finances of themselves and their family during the next 12 months edged up 0.2 per cent.

The survey's "time to buy a major household item" metric rose 0.4 per cent.

Respondents in the poll anticipated inflation would reach 3.8 per cent in two years, an expectation that is the lowest since the weekend of August 17-18, down from 4.1 per cent in the previous week.

The Reserve Bank of Australia has a target inflation rate of between 2.0 per cent and 3.0 per cent although the most recent calculation puts it at an annual rate of 1.7 per cent.

"Renewed weakness in the weekly reading of inflation expectations will be a concern for the RBA," ANZ economist David Plank said.