A change of government has had little impact on confidence, with the mood of consumers remaining down in the dumps in an environment of rising interest rates, ballooning inflation and a steady climb in petrol prices.

However, a swag of new figures suggest Wednesday’s national accounts for the March quarter may not be as weak as first thought, although they are still likely to show the economy suffered a marked slowdown from three months earlier.

The latest weekly ANZ-Roy Morgan consumer confidence survey captured the full response to the May 21 election, in which Labor has secured at least 76 seats to form a majority government.

The consumer confidence index – a pointer to future household spending – was down 0.1 per cent at 90.7, well below its long-run average of 112.4.

ANZ head of Australian economics David Plank said this muted reaction was not unusual.

“Confidence going into the 2022 election was, however, well below previous pre-election levels,” Mr Plank said.

Consumer inflation expectations rose 0.2 percentage points to 5.5 per cent, its highest level since April, which Mr Plank thought probably reflected the rise in petrol prices.

The Australian Institute for Petroleum weekly petrol prices report – released a day late due to Monday’s ACT public holiday – showed the national average price at the bowser rose 0.9 cents in the past week to $2 per litre, the sixth consecutive weekly increase.

Separately, the Reserve Bank of Australia’s latest credit figures showed demand for loans remained solid in April prior to the central bank’s first rate increase in more than a decade at the start of May.

Total credit rose 0.8 per cent to an annual rate of 8.6 per cent, the fastest yearly rate since late 2008, led by a strong rise in business loans.

A survey by Commonwealth Bank of Australia found more than 90 per cent of home owners prepared for the RBA’s May rate rise by either reducing their living costs, building up their savings or making additional repayments on their mortgage.

Still, BIS Oxford Economic senior economist Maree Kilroy believes rising interest rates and increasing building costs will be a drag on new housing demand.

“The RBA cash rate target is expected to reach 1.25 per cent by the end of the year, adding nearly $7000 annually to the average new mortgage repayment,” she said.

The Australian Bureau of Statistics said building approvals fell 2.4 per cent in April to 14,908, following the 19.2 per cent slump the previous month.

Private sector home approvals rose by 0.5 per cent to 10,077, while other dwellings fell 6.1 per cent to 4701.

Meanwhile, economists were busily upgrading their growth forecasts for the March quarter after the ABS released a raft of figures, which included a stronger than expected 10.2 per cent increase in company profits and a 3.2 per cent rise in business inventories.

The international trade balance for the quarter narrowed to a $7.5 billion surplus from $13.2 billion previously, as a 12 per cent rise in imports outpaced a nine per cent increase in exports.

However, ABS head of international statistics Andrew Tomadini said this was the 12th consecutive surplus, the longest run since the 1970s.

Net exports are expected to have made a large 1.7 percentage point detraction from economic growth in the March quarter.

The economy is expected to have grown by around 0.7 per cent in the March quarter, compared to the virtually flat forecasts made by some economists at one stage last week.

However, this would still leave the annual rate around three per cent, well down from the 4.2 per cent pace of December.

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

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