A measure of Australian consumer sentiment slipped for a fifth straight month in April as rising inflation and the risk of higher interest rates weighed on family finances and spending intentions.
The Westpac-Melbourne Institute index of consumer sentiment released on Wednesday dipped 0.9% in April from March, when it slid 4.2%. The index was down 19.6% from April last year at 95.8, and almost back to where it was pre-pandemic.
The survey suggested the government’s budget in March had a limited impact on the national mood, even though it contained pre-election tax breaks and cuts to fuel excise.
Widespread flooding across the east coast also had some effect on sentiment.
“There is further evidence that interest rates, inflation and weather continued to unnerve consumers in the current survey,” said Westpac chief economist Bill Evans.
He noted sentiment among people with a home loan fell a steep 9.2% in April amid speculation the Reserve Bank of Australia (RBA) could raise interest rates as early as June.
Some 70.0% of respondents expected a rise in rates in the next 12 months, the highest level since August 2016 when the question was first included in the survey.
That, coupled with high prices for petrol, housing and food, saw the survey’s measure of family finances compared with a year ago drop 4.8%, while the outlook for finances over the next 12 months fell 0.9%.
Likewise, the survey’s measure of whether it was a good time to buy a major household item sank 5.3%, and is down 20% on a year ago.
There was some improvement in the survey’s measure of the economic outlook for the next 12 months which bounced 5.8% after a sharp fall in March, while the outlook for the next five years edged up 1.0%.
- Reuters, with additional editing by George Russell
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