Election promises boost confidence

Consumer confidence remained buoyant during the September quarter as anxiety about soaring fuel prices was offset by vote-grabbing pre-election promises of tax relief.

But that unexpected resilience was not as prevalent in rural regions or among the poor, according to today's Westpac McDermott Miller survey.

The consumer confidence index was 120.2 for the September quarter - unchanged from the previous three-month period. A reading over 100 indicates overall optimism.

Westpac senior economist Nick Tuffley said that while the present level was the lowest for more than two years and 4.8 points down on the same period last year, it was still "strongly positive" by historical standards.

"Despite the growing headwinds, consumer sentiment has held up," he said. "It's pleasantly surprising how resilient it is."

While the sharp fall in confidence experienced in the June quarter had not continued, consumers were showing signs of uncertainty, said McDermott Miller managing director Richard Miller.

"High oil prices and cost of living increases are the main reasons given for this anxiety."

But expectations that the economy would improve over the medium to long term had increased, "possibly reflecting the boost to incomes promised by the major political parties ahead of the recent election", said Tuffley.

"The election campaign was characterised by considerable focus on the potential for tax relief or tax cuts - both of which may have buoyed expectations of higher disposable income."

The survey found that consumers still believed now was a good time to buy a big household item - a factor that provided key support to the overall level of consumer confidence.

Given the ongoing strength of the dollar and the tight labour market "there is a long way to go before consumers feel unable to afford big-ticket items", said Tuffley.