Consumer confidence took a big hit last week as the Omicron strain continued to tear through the nation, with the key ANZ-Roy Morgan measure recording its worst reading in 30 years.
Sentiment among the 1516 people interviewed dropped 7.6 per cent to a reading of 97.9 – below the neutral level of 100 – and the weakest January result since 1992 when the Australian economy was suffering sharply rising unemployment.
But despite Aussies cutting their spending on entertainment and travel they are spending more money on groceries than ever.
Unsurprisingly, dining and takeaway food spending has plunged.
“Generally, the national seasonal decline in dining spending is around 11-18 per cent, but this year it was 26 per cent,” Ms Timbrell said.
What people are spending on dining and takeaway has shifted online, with more than 10 per cent occurring here in the first half of January compared with 4 per cent pre-pandemic and 12-14 per cent during lockdowns.
During the first fortnight of 2022, one-quarter of non-food buying was online compared to 20 per cent outside of lockdown conditions and a 40 per cent peak during Delta lockdowns last year.
Readings for every single question fell, with 19 per cent of the respondents expecting to be “worse off” financially this time next year – the highest result since September 2020.
Those who felt now was a good time to buy a major household item tumbled 11.4 per cent, falling to its lowest level since August 2020.
“We don’t think the economy is as weak as these data might suggest, with the shock of the Omicron surge and strains on testing capability the key drivers of the fall rather than underlying economic conditions,” ANZ head of Australian economics David Plank said.
“But the result highlights that concerns about Covid have the potential to significantly impact the economy if they linger.”
ANZ senior economist Adelaide Timbrell said the numbers suggested a bigger than usual slump in spending seen in the first fortnight of the year could persist for some time.
“There is not yet any sign of recovery from the Omicron malaise in spending, with a decline of 27 per cent in the first half of January compared to the first half of December (compared with 17-21 per cent declines in previous years),” Ms Timbrell said.
“Weakening consumer confidence through the first half of January is another sign that spending could stay weak for a while longer.”
