Household confidence takes a hit as petrol price hikes fuel back-to-work blues

Strong consumer confidence figures took a nasty knock last week as Australians trudge back to work from the holiday break carrying a load of financial concerns.

Australian consumer confidence dropped 3.3 per cent last week, down sharply from a four-year high the week before, according to the latest ANZ-Roy Morgan report.

The result was dragged lower by a particularly steep drop in sentiment around current household finances, down 9.1 per cent, which could follow a jump in petrol and electricity prices, back-to-school costs, and persistently weak wages growth – all while Australians feel the post-holiday blues.

“Last week saw some pullback in confidence after a series of strong reports,” ANZ head of Australian economics David Plank said.

“Talk of electricity blackouts and a proposed rail strike in Sydney may have weighed on overall sentiment. It is also possible that the New Year return to work was a factor for some.”

“The sharp fall in sentiment around households’ current finances may reflect a jump in petrol prices across Melbourne and Brisbane amidst an environment of low wage growth.”

Pessimism also extended to the big-picture outlook, with views around current and future economic conditions falling 3.6 per cent and 1.3 per cent, respectively.

Despite the weekly fall, consumer confidence sits well above the long-term average, according to Mr Plank.

“Looking past the weekly volatility, we expect sentiment to remain supported by a strong labour market and a solid outlook for economic activity in 2018.”

The Australian average price of unleaded petrol rose by 0.4 cents last week to 138.0 cents a litre, according to the Australian Institute of Petroleum, with the price increases were largely felt by Melbourne and Brisbane drivers.

City petrol prices rose by a steeper 0.6 cents to 137.3 cents per litre, while regional unleaded fell by 0.3 cents to 139.3 cents per litre.

Sydney prices fell 5.7 cents per litre, Melbourne lifted 5 cents, Brisbane added 3.6 cents, while Adelaide, Darwin, Canberra and Hobart were largely unchanged.

And with household budgets back in focus following the most costly and social time of year, bills and petrol costs can noticeably dent financial confidence, according to CommSec senior economist Ryan Felsman.

“The kids return to school next week and we’ll be receiving bills for tuition, stationery and uniforms,” Mr Felsman said.

But good news could be ahead, according to the economist.

“Some respite may be on the way for beleaguered Aussie motorists at the fuel pump. Global petrol prices had risen to three-year highs, but prices fell last week and Australian retail pump margins may have peaked.”