Australian consumer confidence has dropped two points in the first quarter of 2011, taking the country’s index to 110 points, according to a Nielsen survey.
This drop in Aussie consumer confidence follows two consecutive quarters of decline since the end of quarter three in September last year.
Contrast this to the rest of the Asia Pacific region, excluding Japan, where consumer confidence achieved its highest level on record, jumping 10 index points from the last quarter to reach 107.
Despite the two point drop in consumer confidence, Australia’s index of 110 still signifies an optimistic outlook. Out of the 51 countries surveyed globally, Australia was the fourth most optimistic market tied with The Philippines and Switzerland. India remained the most optimistic nation, with a consumer confidence index of 131, followed by Saudi Arabia at 118 points and Indonesia at 116 points.
Fifty-one percent of consumers surveyed said they are putting their spare cash into savings, which is up seven percentage points from quarter four of 2010. They said they will be controlling their household expenditure by saving on gas and electricity (68 per cent), buying less new clothing (64 per cent), reduce consumption of eating out (58 per cent), cutting back on out-of-home entertainment (56 per cent) and switching to cheaper grocery brands (55 per cent).
Chris Percy, managing director – Pacific, Nielsen Consumer Group, said he is not surprised that consumers are concerned about their household budget.
“The consumer price index is creeping up to 3.3 per cent; personal savings rates have increased to 10 per cent, the highest they’ve been since the 1980s; there is uncertainty around interest rate rises, with some analysts forecasting a least one rate rise before the end of the year; fresh produce prices have skyrocketed, following the recent spate of natural disasters; and a 12-month flood levy tax will be imposed by the Federal government from 1 July,” he said.
The survey also found that the top concerns for Australians over the next six months are still the rising cost of utilities, at 37 percent, which has consistently been the biggest worry for online consumers since quarter three, 2009. Fuel and food prices are also other worries of consumers.
“Rising food and fuel prices are continuing to take their toll on consumers around the world as more and more households commit a larger proportion of their limited income to these necessities. As spare cash continues to dwindle, consumers are taking action to save on household expenses that they can control by reducing expenditure on non-essential items and activities,” Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen, said.