WATCH: consumer confidence, inflation & rates

The Reserve Bank of Australia (RBA) faces an environment of falling consumer confidence and growing inflation expectations ahead of its November meeting, according to data from ANZ Research.

The ANZ-Roy Morgan Australian consumer confidence index hit a 12-month low in October on a four-week average basis. Household confidence in the economy over the next five years has fallen to its lowest level in over 15 years.

The report’s inflation expectations measure is at its highest level since late January on a four-week moving average basis.

Speaking to ANZ Institutional Insights on video, ANZ Economist Sophia Angala said the decline in confidence was “broad-based”, driven particularly by softening household confidence in financial and economic conditions.

“Notably, household confidence in their personal financial conditions over the next 12 months has trended down so far this year,” she said. “And on a four-week moving average basis, this measure is now sitting at around the same level that it was in late 2023.”

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Angala said the next-five-year economic confidence measure has been on a downward trend in 2025, and “global uncertainty may have been driving” the shift.

“Household confidence in their economic conditions over the next year also dropped, and is now sitting at its lowest level since mid-April, following US tariff announcements earlier that month,” she said.

ANZ-Roy Morgan’s inflation expectations index lifted to 5.1 per cent on a four-week moving average basis and has been trending up since late September.

“That recent drive-up might have been influenced by recent RBA commentary out of its September meeting, where the RBA did flag [September-quarter] inflation data may come in higher than what the RBA was expecting,” Angala said.

ANZ Research expects trimmed mean inflation to lift 0.9 per cent quarter-on-quarter in the September-quarter, which would imply recent momentum in underlying inflation is near the top of the RBA's 2 per cent to 3 per cent inflation target band, “pointing to a stalling in disinflation,” according to Angala.

ANZ Research expects the RBA to hold Australia’s official cash rate in November, and thinks the RBA’s February meeting is the next plausible opportunity for a cut.