Australian households are experiencing their most persistent pessimism since the early-1990s recession, according to the Westpac–Melbourne Institute consumer sentiment index. Confidence among Australian consumers has plunged approximately 20% since the Reserve Bank of Australia (RBA) increased interest rates to levels not seen since 2011.
The survey, conducted between 28 September and 1 October, showed the overall confidence index fell by 4.7% to 80.4% in October. However, for those surveyed after the RBA's rate decision on 29 September, the index dropped to 67.2%, marking the lowest level since the late 1990s. This aligns with the weekly ANZ-Roy Morgan consumer survey, which saw a roughly 5% decline to 67.1 points.
Matthew Hassan, Westpac's head of Australian macro-forecasting, noted that sentiment has been extremely weak for the longest period since the early 1990s recession. He stated that the latest RBA move appears to have significantly unsettled consumers, with a sharp deterioration in responses observed after the decision was announced. Assessments of family finances and buyer sentiment were the most affected categories.
AMP economist My Bui suggested the decline was expected due to the September rate hike and increasing fuel prices. Bui calculated that the weekly petrol bill for a typical Australian household has risen by $20 since the beginning of the year. Mortgage holders are the most pessimistic subgroup among homeowners, while renters remain the most optimistic.