SYDNEY – Last week, Australian consumers’ sentiment plummeted after a surprisingly high level of inflation fueled fears about rising interest rates and the cost to live.

Last week saw a 6.0% decline in ANZ’s measure of consumer confidence. This is the biggest drop since January, when the Omicron storm swept the eastern seaboard. Data showing that consumer price inflation rose to an all-time high of 5.1% during the first quarter was what caused this slide.

This was an uphill battle for Scott Morrison, Prime Minister of Canada, as he fought a difficult election campaign which, according to opinion polls could result in him being removed from office on May 21.

An index reading of 90.7 suggested that optimists are now outnumbered by pessimists. This is despite speculations the Reserve Bank of Australia could raise rates during its next policy meeting on Tuesday.

The week saw a 9.6% drop in confidence among mortgage holders, and a sharp decline in measures of economic and financial conditions.

David Plank (ANZ’s Australian economists) noted, “This is the lowest level of consumer confidence at tightening cycles since the inflation targeting system began in early 1990s.”

“This could see the RBA tightening more slowly than what the market prices.”

The market is betting that the RBA would raise its 0.1% cash rates to 0.25% on Tuesday. It will then move to 0.5% in July. The futures indicate a string of rate hikes that will take rates up to 2.5% at the end of this year, and 3.5% in the middle 2023.