Consumer confidence: ANZ-Roy Morgan reading shows sentiment at record low since series began in 1973

Skyrocketing fuel prices and the prospect of more interest rate rises to tackle an inflation resurgence have caused Australian consumer confidence to plunge to a record low.

ANZ-Roy Morgan’s measure of consumer confidence last week fell to the worst level since records began in 1973, a year also hit by a global oil crisis in the Middle East.

The score of 63.1 points for March 16-22 was well below the 100-level where optimists outnumber pessimists, and well under the 109-point average since the early 1990s recession.

It coincided with the Reserve Bank of Australia raising interest rates by another quarter of a percentage point on March 17, following a February increase, marking the first back-to-back hikes since mid-2023.

“The impacts of the Middle East conflict on oil prices and the economic outlook are likely behind the drop, along with the RBA’s decision last week to increase the cash rate to 4.1 per cent,” ANZ economist Sophia Angala said.

With unleaded petrol now selling for $2.50 in capital cities, Australian consumers are expecting inflation now at 3.8 per cent to rise even further above the Reserve Bank’s 2-3 per cent target.

Treasurer Jim Chalmers last week warned of inflation hitting 5 per cent in coming months.

“With very large increases in petrol prices through March, inflation expectations rose to an all-time high last week,” Ms Angala said.

The prospect of even more service stations running out of fuel, as result of Iran blocking the Strait of Hormuz, has also turned consumers off buying major items for their home, like they did at the start of COVID six years ago.

“Household confidence in their current and future finances weakened sharply, as did the ‘time to buy a major household item’ subindex, which is at its lowest since late March 2020 when pandemic lockdowns were announced,” Ms Angala said.

Myer executive chair Olivia Wirth noted consumers were holding back on making big purchases as she announced the department store chain’s half-year results for the six months to January 24.

“We continue to see some caution in discretionary spend and we’ve got to trade as best we can in that environment,” she told The Nightly on Tuesday.

NAB, Australia’s biggest business lender, is now expecting gross domestic product growth for 2026 to slow to 1.8 per cent, down from an already weak 2.5 per cent in 2025, as higher costs arising from the Middle East conflict are too large to simply be added to prices.

“The main drivers of our downward revision to GDP have been a weaker outlook for growth in household consumption and modestly softer forecasts for business investment growth as corporate profits come under pressure amid a more uncertain backdrop,” its economists said in a note on Tuesday.

“The speed of price adjustment is also compounded by the magnitude of supplier price rises — they are simply too large to be absorbed by margins.”

Consumer price index inflation data for February, due out on Wednesday, is expected to remain high at 3.8 per cent, with the figures mainly pre-dating the US strike on Iran that killed Supreme Leader Ayatollah Ali Khamenei and sparked a regional conflict with the Gulf states.

“The Israel/US assault on Iran began in the morning of the 28th of February. As such, the recent surge in oil prices occurred too late to have an impact on the February CPI,” Westpac senior economic Justin Smirk said.

“In fact, fuel prices were still falling through February.”

Before the oil crisis, soaring education costs were the biggest drain on family budgets.

An inflationary surge in the March data, due out at the end of April, is broadly expected to see the RBA raise rates again on May 5.

Every rate hike adds $120 to monthly repayments on an average, new mortgage of $736,000.

The ANZ-Roy Morgan consumer sentiment barometer is based on interviews with 1039 people, done online and by phone.