Tax cuts lift confidence

Survey says cash injection improves sentiment

CONSUMER confidence moved higher over the weekend as many taxpayers cashed in their refunds, an ANZ analysis suggests.

The ANZ-Roy Morgan Australian Consumer Confidence index rose 1.9 per cent from the previous week, with respondents’ perception of the economy – including the outlook for the next 12 months – jumping 5.8 per cent, while prospects about conditions in the next five years were unchanged.

But the weekly survey of consumer mood, which is based on about 1000 face-toface interviews conducted on Saturdays and Sundays, also recorded a 0.9 per cent fall in how people felt about their financial condition compared to a year ago.

This was the only one of the sub-indexes to record a decline

There was a 1.2 per cent increase in sentiment when people were asked about the finances of themselves and their family over the next 12 months.

The “time to buy a major household item” metric rose 3.5 per cent, after retreating 4.4 per cent in the previous week.

This gives hope for a boost to the retail market, with demand for big-ticket items expected to increase in the coming year.

“Confidence gained for the second straight week, and is now well above its long run average,” ANZ economist Felicity Emmett said.

“The Federal Government’s tax refunds for low- and middle-income earners look to be boosting sentiment, particularly in the case of the ‘time to buy a household item’ subindex.”

She said that the statement by RBA Governor Philip Lowe (pictured) that interest rates would remain low for an extended period was “also likely to have helped support confidence, pushing equities to 12year highs”.

The survey also found that the four-week moving average for inflation expectations was up 0.1 of a percentage point to 4.1 per cent.

Workers earning between $48,000 and $90,000 a year will receive a $1080 refund after they lodge their tax return. The $158 billion income tax plan, which passed Parliament with the support of Labor, Centre Alliance and Jacqui Lambie, offers tax cuts for the last financial year.