Household confidence dives amid soaring costs

The confidence of WA households for the coming year has tumbled to its weakest position in six years, according to CCIWA’s final Consumer Confidence Survey for 2022.

The report, released today, shows one-third of WA consumers reducing their spending on essentials, as every factor driving household confidence — from jobs, the domestic economy, and global risks — swung towards ‘negative’.

READ THE CONSUMER CONFIDENCE REPORT 

In the short term, more than a third of West Australians (37 per cent) expect economic conditions to worsen rather than strengthen (16 per cent), an 18-point decline in sentiment.

Looking to 2023, two in every five WA households (39 per cent) expect the economy to worsen in the next 12 months, the weakest long-term sentiment since December 2016.  

One quarter (26 per cent) anticipate better economic conditions. Across these two measures, confidence has fallen by 20 points.  

 “Living costs are cruelling confidence, cited by a record-high four in every five respondents,” said CCIWA Chief Economist Aaron Morey. 

“Concerns about interest rates have soared by 33 percentage points since the Reserve Bank rate hikes began, impacting the confidence of seven in 10 households.” 

In this edition, CCIWA surveyed how WA’s consumer spending has changed under current cost conditions.  

  • More than half of respondents have reduced their spending on holidays and entertainment (54 per cent), cafes and restaurants (54 per cent) and consumer goods like electronics, cosmetics and clothing (52 per cent). 
  • On the home front, spending on renovations, homeware and furniture was reduced by two in five respondents (42 per cent). 
  • Around one third of Western Australians have reduced their spending on essentials like groceries (37 per cent), transport and fuel (37 per cent) and health care (26 per cent).

The impacts were particularly felt by mortgage-holders, of whom four in five (84 per cent) reduced their spending on at least one category.  

Approaching the end of 2022, the report found nearly half of Western Australians (46 per cent) have dipped into their savings or offset accounts to cover higher living costs, especially young people. The average WA household has drawn down approximately 30 per cent of their financial reserves in the past six months.  

“Facing risks of global inflation and geopolitical tension, Australian decision-makers should refocus on policy which encourages economic growth and resilience,” Morey said. 

“To this end, the State Government should lower the burden of payroll tax in WA, and work to ensure WA gets a fair share of funding under the Federal Government’s $15 billion National Reconstruction Fund.” 

  

CCIWA’s Economic reports, including Business Confidence, are available exclusively to CCIWA Advantage and Corporate Members. For more see CCIWA’s Economic Insight page. 

Related

Climate change legislation will provide WA businesses direction to achieve net zero
New climate change legislation to be introduced by the WA Government, which will outline a framework to reduce emissions, has been welcomed by the State’s business...
Read more »
WA business confidence slumps as cost pressures, skills shortages persist
Increased cost pressures and persistent skills shortages have dampened WA’s festive spirit, CCIWA’s final Business Confidence Survey for 2022 shows. 
Read more »
ITIC meets with Swiss Ambassador
Collaboration and bilateral trade and investment engagement were on the agenda at a meeting in December between CCIWA’s trade centre and Swiss Ambassador to Australia Caroline...
Read more »