Confidence among Australians has suffered its biggest weekly drop since the early stages of the pandemic last year as the country suffers a series lockdowns in trying to tame the virus.
The ANZ-Roy Morgan consumer confidence index tumbled 5.2 per cent, its sharpest weekly fall since late March 2020.
The fall follows the extension and tightening of the Sydney lockdown until July 30 and the fifth lockdown in Melbourne, which has been extended for another week beyond its originally planned five days.
Confidence declines were widespread, with Adelaide posting the biggest fall, even before the South Australian government imposed a week long lockdown from 6pm on Tuesday.
The confidence survey was taken at the weekend.
ANZ head of economics David Plank said the sub-indices that capture economic conditions and whether it is time to buy a major household item are at their worst levels since early November 2020.
He said while this highlighted some renewed caution of households, levels are nowhere near the lows seen in the early stage of the pandemic.
Economists estimate the twin lockdowns in Australia's two biggest cities could wipe up to $10 billion from growth and potentially result in an economic contraction in the September quarter.
The South Australian lockdown will be least another $250 million drag, according to Australian Retailers Association CEO Paul Zahra.
"This is particularly damaging for small businesses that will have to close," Mr Zahra said.
The minutes from the Reserve Bank of Australia's July 6 board meeting released on Tuesday were somewhat outdated by events in the past fortnight.
However, the minutes note recent COVID-19 outbreaks in many parts of the country, and associated restrictions, were considered likely to weigh on household consumption through the middle of the year.
"However, as observed following earlier lockdowns, spending was expected to rebound when containment measures were eased, supported by highly accommodative policy settings, the strengthened balance sheets of many households and firms, and an increase in the pace of vaccinations," the minutes said.
At the meeting RBA members agreed to keep the cash rate and its three-year bond yield target at a record low 0.1 per cent.
It also made adjustments to its bond-buying program, aimed at keeping market interest rates and borrowing rates low.
From September, the RBA will purchase $4 billion worth of government bonds a week, a reduction, or taper, from the current rate of $5 billion a week.
But there is speculation among economists that this may be reviewed at the August 3 board meeting.
"It is difficult to see how the RBA would continue with plans to taper if restrictions continue to drag on. It is even possible the RBA could increase the rate of bond purchases," St George economist Matthew Bunny said.
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