Consumers remain down in the dumps ahead of another close interest rate decision that could pile even more pressure on households.
Confidence as measured by ANZ and Roy Morgan each week has returned a below-80 result for the 14th week in a row.
The index edged 0.4 points lower, with confidence about future financial conditions sinking to its lowest point since the COVID outbreak in March 2020.
Across the states, confidence dipped in NSW and South Australia, but rose in Victoria, Queensland and Western Australia.
Confidence among mortgage holders and renters has been trending lower than for those who own their homes outright, but last week homeowner sentiment fell 4.6 points.
For renters, confidence improved 3.2 points, and one point for those paying off their homes.
But an interest rate hike in June, which most observers agree is a possibility, could unwind these gains.
The Reserve Bank board is due to meet on Tuesday to discuss a mixed bag of data over the past month, including a stronger-than-expected monthly inflation reading.
Monthly inflation data, which can be volatile, came in at 6.8 per cent in April, up from 6.3 per cent in March.
The central bank will also weigh up signs of an easing but still robust jobs market, as well as fresh wage data, which revealed pay packets growing at 3.7 per cent in the March quarter.
Wage growth alone is unlikely to worry the RBA, which is comfortable with wages hitting a peak of four per cent annual growth.
But Governor Philip Lowe remains concerned about unit labour costs – the difference between wages growth and productivity growth.
Dr Lowe told a federal parliamentary hearing last week that sluggish productivity growth, not wages, was complicating the RBA’s job of returning inflation to its two to three per cent target.
Some economists have also flagged the Fair Work Commission’s minimum wage decision as a possible cause for concern that could push pay packets higher than the RBA can manage.
But Workplace Minister Tony Burke said the minimum wage rise of 8.6 per cent would not lead to higher inflation.
He said the argument that those on the minimum wage would cause inflation to spike did not stack up.
“Some people effectively (have wanted) to blame workers for any decision that the Reserve Bank might make,” Mr Burke told ABC Radio.
“The people affected by the annual wage review are the people on the lowest incomes. They’re the people relying on it.”
Shadow treasurer Angus Taylor said the government needed to prioritise bringing down inflation.
“The sad reality is the Reserve Bank is under enormous pressure now to raise interest rates,” he told ABC TV.
“There is enormous pressure on cost of living out there and that means there’s pressure on interest rates and, sadly, we are in a position where the expectations of markets and economists say we’re going to see more pain.”
– AAP
