Confidence falling among consumers as RBA prepares for more rate rises

RBA minutes showed board members believed it was now “clear” wages growth was accelerating as well as inflation pressure.

Confidence is now lower than at any point in any past election since the weekly measure began in the 1990s.Voters will go to Saturday’s election with consumer confidence at its lowest level ahead of any federal poll on record and warnings from the Reserve Bank to expect a string of interest rate rises to deal with growing domestic inflation pressures.

“While the significant rise in inflation had been largely the result of global factors, which were likely to have a more temporary effect on inflation, the flow of information on inflation and wages over the preceding month had been consistent with more persistent inflationary pressures arising from limited spare capacity in the domestic economy,” the minutes showed.

Since then, unemployment has fallen to a near 50-year low but inflation – at 5.1 per cent – is now running at its. Inflation pressures are expected to climb, with the RBA forecasting it to reach 6 per cent before the end of the year. Westpac chief economist Bill Evans said it now appeared the bank would use its meeting in June to take the cash rate to 0.75 per cent.Interest rates and cost-of-living issues are weighing on consumer sentiment.The ANZ-Roy Morgan weekly measure of consumer confidence fell another 1.3 per cent last week, its fourth consecutive drop, with the cost of living and the state of the economy top of shoppers’ minds.

Miserable economic news blowing a hole in Libs economic credentials. This election will not be close.

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