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Dinner for few: Australians eating out less as fuel crisis deals biggest blow to consumer confidence since Covid
TL;DR
Australians are dining out less due to rising fuel prices and declining consumer confidence, opting for cheaper meals and drinks. The Westpac-Melbourne Institute sentiment index shows the largest drop in confidence since the pandemic began.
Key points
- Australians are eating out less due to rising fuel prices
- Consumers are opting for cheaper meals and drinks
- The Westpac-Melbourne Institute sentiment index shows a sharp decline
- Price sensitivity among consumers has increased
- The situation is worsened by the war in Iran
Australians are choosing chicken schnitzel over more expensive rib-eye steak, avoiding entrees and sticking with tap water rather than a glass of wine amid ongoing uncertainty surrounding the fuel crisis and war in Iran.
As soon as the numbers on the petrol bowser started climbing last month as the US and Israel launched strikes on Iran, the customer response was swift.
“It happened in a matter of weeks; when you get this sort of dip in consumer confidence, that’s the way consumers act,” said John Hart, a restaurant owner and president of the Restaurant & Catering Association. “They’re eating at cheaper places or ordering less at the places they normally go.
“There’s very heightened price sensitivity.”
Consumer confidence is plummeting in Australia, with the closely watched Westpac-Melbourne Institute sentiment index, released on Tuesday, recording its sharpest monthly decline since the onset of the pandemic.
Westpac’s head of Australian macro-forecasting, Matthew Hassan, said consumers are bracing for a return to the extended period of financial pressure experienced during the pandemic inflation surge.
While it is common for consumers to change their spending habits during uncertain economic times, the speed of the response has been unusual. The Iran war, which has triggered huge volatility in oil prices, sparked an immediate rise in electric vehicle sales and changes in commuter habits.
Households are also stocking up on long-life pantry staples over fears food prices will rise and shortages could occur.
For many people, their reduced spending on dining out is about “cautious consumption”, whereby they shift into risk-averse behaviour due to concerns over the future – even though they could technically afford to order a full three-course meal and drinks.
Others were already struggling before the surge in petrol prices, coupled with interest rate hikes, pushed them into financial distress.
Q&A
How has the fuel crisis affected dining habits in Australia?
The fuel crisis has led Australians to choose cheaper meals and avoid expensive items, reflecting heightened price sensitivity.
What is the current state of consumer confidence in Australia?
Consumer confidence in Australia is plummeting, with the Westpac-Melbourne Institute sentiment index showing its sharpest decline since the pandemic.
What specific changes are Australians making when dining out?
Australians are opting for cheaper options like chicken schnitzel, avoiding entrees, and choosing tap water over wine.
What events contributed to the decline in consumer confidence in Australia?
The decline in consumer confidence is attributed to rising fuel prices and the ongoing war in Iran.
