Cost-of-living and interest rate pressures are expected to hamper Western Australians’ spending this festive season, a new CCIWA report finds.
According to CCIWA’s quarterly Consumer Confidence report, WA consumers are expected to spend $5.1 billion over the holiday period, averaging $1,000 per household – a similar figure to 2022.
Two in five (41%) Western Australians expect to spend the same amount as they did last year, with a similar number (39%) set to rein in spending. One in five (21%) expect to spend more.
This shows consumers are likely to spend slightly more than in 2022, as last year’s December report found 38% said they’d spend less, 17% would spend more and 43% would spend the same.
CCIWA Chief Economist Aaron Morey says despite the steady consumer sentiment heading into Christmas, financial pressure is still a major concern.
“We’ve seen a seven-percentage point increase in the number of WA households experiencing financial stress compared with the same time last year,” he says.
“59% of WA households have told us they’ve experienced one financial stressor in the last three months, and 28% experienced at least two.
“The fact that more than half expect to spend the same or more despite these factors is a sign of continued confidence in our economy, underpinned by a very stable jobs market in WA.”
Generation gap
The report shows a generation gap with spending intentions over the holidays.
A third of young people aged 18-39 are expected to spend more than last year, compared to only 10% of people aged over 65.
“This could be driven by a number of factors, including increased travel by younger people over the holiday period,” Morey says.
Consumers’ economic outlook
Over the next three months, almost one half (49%) of consumers are confident that economic conditions will remain the same. This is balanced by one in five (21%) expecting conditions to strengthen – up by two percentage points from the last quarter – and the remaining three in 10 (30%) taking a more pessimistic outlook.
Looking ahead for 2024, consumer confidence drops, with one in three (33%) anticipating conditions to improve or stay the same.
Despite WA households taking either a cautious or pessimistic view, they are more optimistic than the rest of the nation.
The latest Westpac-Melbourne Institute Consumer Sentiment Index was -2.6% in November, compared to CCIWA’s Consumer Confidence Index of -2% for 12 months and neutral (0%) for three months.
Consumer confidence influences
Increased living costs are the greatest concern for (71%) WA households. However, this is the lowest figure for living costs since March 2022, likely reflecting the gradual decline in inflation throughout 2023.
Also hindering confidence are interest rates (64%), global economic news (57%) and personal finances (40%).
On the flipside, confidence is held up by strong employment prospects (40%) and economic stability led by confidence in the State Government (34%).
CCIWA’s Economic reports, including Outlook, are available exclusively to CCIWA Advantage and Corporate Members. For more see CCIWA’s Economic Insight page.
