Australian Consumer Confidence Drops Sharply Amid Rising Cost‑of‑Living Pressures and Uncertain Rate Outlook
Australian consumer sentiment slipped markedly in September, with the Westpac–Melbourne Institute Consumer Sentiment Index declining from 88.9 to 84.4, a 5.2% fall that sent confidence drifting back toward the deeply pessimistic terrain observed earlier this year. The decline was broad based: perceptions of family financial health compared with last year fell from 80.0 to 72.6, while outlooks for family finances over the next twelve months slid from 98.2 to 94.5. Westpac attributed the setback chiefly to intensified cost‑of‑living pressures spurred by higher fuel prices and mounting anxiety over stronger inflation potentially triggering another Reserve Bank of Australia (RBA) rate hike.
The mood among borrowers turned grim as well. The Mortgage Rate Expectations Index rose from 158.8 to 170.4, and the share of consumers anticipating rising mortgage rates climbed from 59% to 64%. Among those holding mortgages, that proportion surged to roughly 73%. At the same time, housing sentiment weakened— the “time to buy a dwelling” indicator fell from 95.7 to 85.5—while unemployment expectations edged upward, moving from 135.7 to 139.4, reflecting heightened unease about the labour‑market outlook.
Data Summary
| Indicator | |||
|---|---|---|---|
| September | 84.4 | 88.9 | -5.2% |
| August | 72.6 | 80.0 | -9.2% |
| Change | / -5.2% |
Higher readings in the Unemployment Expectations Index indicate more consumers expect unemployment to rise.
Key Takeaways
- Australian consumer sentiment dropped from 88.9 to 84.4—a 5.2% decline—that pushed confidence back toward the deep‑pessimism seen earlier this year.
- Household finances were the primary stressor, with assessments of finances against last year falling from 80.0 to 72.6 as higher fuel costs and fee‑rate worries weighed on households.
- Mortgage‑rate expectations surged from 158.8 to 170.4; about two‑thirds of consumers now anticipate raises in mortgage repayments, and nearly seven‑in‑ten of homeowners expect higher rates.
- Housing and labour‑market indicators also faded— the “time to buy a dwelling” metric slipped from 95.7 to 85.5—and expected unemployment nudged up from 135.7 to 139.4.
- Westpac acknowledges that July’s stronger consumer price inflates raise the odds of a future rate hike, yet still expects the RBA to hold at the September 28‑29 meeting rather than chase a single monthly reading amid persistently volatile inflation signals.
Full Australia Westpac consumer sentiment release availablehere.