Australian consumer sentiment slips again in Sept despite rate pause

Australian consumer sentiment slipped further in September, as a decision by the country's central bank not to hike rates for a third month failed to soothe worries about the economic outlook and family finances.

Australian consumer sentiment slipped further in September, as a decision by the country's central bank not to hike rates for a third month failed to soothe worries about the economic outlook and family finances. The Westpac-Melbourne Institute index of consumer sentiment dipped 1.5% in September from August to 79.7, a reading that showed pessimists again outnumbered optimists.

The index has been below the neutral 100 mark since March 2022, the longest streak since the early 1990s recession. A slowdown in consumer spending is one reason the Reserve Bank of Australia (RBA) held rates steady at 4.1% last week, though it cautioned that it might yet have to hike further to bring inflation to heel.

The third straight pause helped lift confidence among mortgage holders, up 7.8% for the month, but the gain was more than offset by a 6.1% fall for renters and a 5.8% drop for consumers that own their home outright. "The strong message from the survey detail is of ongoing intense pressures on family finances," said Bill Evans, Westpac chief economist.

"The cost of living remains the key negative for confidence in this cycle. While the 'threat' of rising rates is expected to ease further, a sustained recovery in confidence will only emerge when households are much more comfortable with the cost of living." Confidence in family finances slumped 4.4%, while a measure of whether it was a good time to buy a major household item dropped 3%.