Financial News: Australia Westpac Consumer Confidence Deteriorates

Australia Westpac Consumer Confidence Deteriorates

(RTTNews) - Australia consumer confidence deteriorated in February as the rise in interest rates put renewed pressure on finances, survey data from Westpac showed on Tuesday.

The Westpac-Melbourne Institute consumer sentiment index declined to 90.5 in February from 92.9 in January.

The central bank's 25 basis-point rate hike this month has put renewed pressure on finances, dented attitudes towards major purchases and raised concerns about medium-term prospects for the economy, the survey showed.

However, the current level of 90.5 was well above the extreme lows sustained through most of 2022-2024.

The survey revealed that the decline in sentiment in February was centered on current assessments.

The 'time to buy a major item' sub-index dropped 5.6 percent to 93.5. Likewise, the 'family finances vs a year ago' sub-index slid 4.7 percent to 78.8. Higher interest rates and the direct effects of higher inflation on the cost-of-living had an impact.

While the 'family finances, next 12 months' sub-index ticked down very slightly to 97.7, the 'economy, next 12 months' sub-indexes ticked up very slightly to 88.5.

At the same time, the 'economy, next 5 years' sub-index dropped 2.5 percent to 93.5 in February.

The 'time to buy a dwelling' index plunged 6.3 percent. At 84, the latest reading was its lowest since December 2024.

However, consumers' house price expectations posted a strong growth. The Westpac-Melbourne Institute Index of House Price Expectations gained 3.9 percent to 173.9, which was a new fifteen-year high.

The near-term expectations for the labor market held relatively steady, with the Westpac- Melbourne Institute Unemployment Expectations Index rising 0.3 percent to 129.8.

Over 80 percent of survey participants expect interest rates to rise further in the next twelve months.

The Westpac-Melbourne Institute Mortgage Rate Expectations Index, which tracks consumer expectations for variable mortgage rates over the coming twelve months, surged 16.1 percent to 177.5, the highest level since June 2023.

The Monetary Policy Board of the Reserve Bank of Australia next meets on March 16 and 17. While a follow-up rate hike cannot be ruled out, Westpac said a more likely outcome is that the Board waits for more data, quarterly inflation updates in particular, before making its next move.

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