13/04/2022 - 16:11

Confidence drops among WA consumers

13/04/2022 - 16:11

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Consumers are pessimistic about the state’s economy, with confidence dropping nearly 10 per cent in April.

Confidence drops among WA consumers
Activity in the CBD has been lower during the COVID wave. Photo: Matt Mckenzie

Consumers are pessimistic about the state’s economy, with confidence dropping nearly 10 per cent in April.

Western Australian consumers were more negative than positive for the first time in 10 months, according to data from Westpac and the Melbourne Institute.

St George Bank (a Westpac subsidiary) senior economist Jarek Kowcza said every state posted a score below 100 in the latest data, indicating pessimism outweighed optimism across the board.

But the collapse in WA confidence was worse than any state, at 9.9 per cent, with a 5.4 per cent fall in Queensland the next biggest drop.

While New South Wales was pessimistic, the outlook was improving, with a lift of 5.4 per cent.

Mr Kowcza said a range of concerns weighed on consumers in the survey, which was undertaken in early April.

“Cost-of-living pressures and the prospect of higher interest rates are impacting households,” he said.

“Supply-chain disruptions and the impacts of the war in Ukraine are adding to inflationary pressures.”

It was the fifth straight month of declining consumer sentiment nationally, Mr Kowcza said.

All of that came despite a federal budget intended to boost consumers.

The big items were a move to cut fuel excise by half, which was expected to reduce petrol prices by about 22 cents per litre; a cash payment for pensioners; and a one-off lift in the Low and Middle Income Tax Offset.

While the federal government was comfortable to continue running huge deficits in a strong economic environment, the country’s central bank is starting to look more hawkish.

Some economists are tipping the Reserve Bank of Australia will lift interest rates as soon as the May federal election is finished, which will tighten belts for many households.

In WA, the state is moving through higher COVID caseloads than at any time since the pandemic began, adding to pressures.

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