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According to the ANZ–Roy Morgan Consumer Confidence Survey, running since 1973, confidence dropped 5.4 points last week to 63.1, falling below its previous low in March 2020 and marking the weakest result in the survey’s 53-year history.
The long-term monthly average since 1990 sits at 109 points, while the index has been around 90 points before inflation began accelerating in the second half of 2025.
Household financial sentiment has deteriorated sharply. Just 14 per cent of Australians (down 1 ppt) said their families are better off than a year ago, a record low, while 57 per cent (up 5 ppts) said they are worse off, producing a net reading of -43 per cent.
Expectations for the year ahead have also worsened, with only 18 per cent (down 3 ppts) expecting to be better off financially – another record low – compared to 49 per cent (up 6 ppts) who expect to be worse off – a record high.
Sentiment towards the broader economy remains weak. Only 6 per cent (up 1 ppt) of Australians expect ‘good times’ over the next 12 months, while 54 per cent (up 5 ppts) expect ‘bad times’ – the highest level since August 2020.
Longer-term views were largely unchanged, with 9 per cent (up 1 ppt) expecting positive economic conditions over the next five years, compared to 31 per cent who expect conditions to deteriorate.
Buying intentions have also declined, with just 14 per cent (down 2 ppts) saying now is a good time to purchase major household items – the lowest level since March 2020 – while 55 per cent (up 8 ppts) said it is a bad time – the highest level since November 2023.
Uncertainty dominates outlook
The survey results come amid a volatile global backdrop and heightened economic uncertainty.
ANZ economist Sophia Angala said a combination of geopolitical tensions and monetary policy tightening had contributed to the sharp decline in sentiment.
“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 4.10 per cent,” she said.
On the global stage, conflict involving the US, Israel, and Iran has driven oil prices higher and contributed to broader uncertainty. Brent crude prices have climbed to around US$100 per barrel at the time of publishing.
Concerns are also being reflected domestically. Research from the Australian National University found that 64 per cent of Australians are now worried about national security, up from 42 per cent in November 2024.
Among non-military risks, a severe economic crisis ranks as one of the top concerns, with 75 per cent of respondents identifying it as a serious threat over the next decade.
Rates on the rise
The decline in confidence also follows recent monetary tightening by the Reserve Bank of Australia.
In February, the central bank lifted the cash rate for the first time since November 2025, before delivering a second increase this month, taking the official rate to 4.1 per cent.
RBA governor Michele Bullock said the latest decision was driven by persistent inflation pressures rather than short-term factors, such as fuel prices.
“Higher petrol prices will add to inflation, but they’re not the reason for today’s decision. Inflation was already too high, reflecting the fact that demand is outstripping supply,” she said.
“We don’t want to have a recession, but if it’s hard to get inflation down, then we’re going to have to deal with that possibility.”
As of January 2026, annual inflation was running at 3.8 per cent, above the RBA’s 2–3 per cent target band. Trimmed mean inflation also edged higher to 3.4 per cent, up from 3.3 per cent in the 12 months to December. February inflation figures are due to be released today.
The current environment is also weighing on businesses. Separate research shows inflation and rising costs remain the primary barriers to growth for Australian SMEs, with nearly half identifying them as their biggest challenges.
Looking ahead, further tightening may be on the horizon. All four major banks are forecasting another rate increase at the RBA’s May meeting.
National Australia Bank said the “macro-economic outlook appears to be transitioning towards a more treacherous phase”.
ANZ’s Angala also reiterated her forecast and said: “Concerns around upside inflation risks and urgency to keep inflation expectations anchored are likely to support a final 25 basis point rate hike by the RBA in May, taking the cash rate to 4.35 per cent.”
[Related: Brokers report refinancing surge following RBA rate hike]