Australia's consumer confidence declined further in October, driven by the Reserve Bank's interest-rate increase and ongoing pressure from fuel prices, with households reporting growing unease over the jobs outlook. The Consumer Sentiment Index dropped 4.7% to 80.4 points, Westpac Banking Corp. said in a statement on Tuesday, with 100 being the dividing line between pessimists and optimists. The reading across the 40% of respondents surveyed after the RBA decision came in at 67.2, an alarmingly weak result, Westpac said. "Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight," said Matthew Hassan, Westpac's head of Australian macro-forecasting. "At just over 80, the latest sentiment index is amongst the forty worst reads since our monthly survey began in the early 1970s." The RBA last week raised its key rate to a 15-year high of 4.6% as it tries to regain control over inflation.
That was the fourth hike this year and has left households increasingly squeezed by both higher borrowing costs and escalating fuel prices as the Middle East conflict drags on. "The latest RBA move looks to have badly rattled consumers," Hassan said. Yet despite the deterioration in confidence, housing-related sentiment improved in October, the survey showed. That comes as the rate hikes and government tax changes have deepened a slump, with prices falling 1.1% in September and retreating to levels last recorded a year earlier. "Improvements following an interest rate rise are rare but not unheard of, particularly when buyer sentiment is already coming from a very weak level," Hassan said. "Across sub-groups, the improvement was more pronounced for outright homeowners, retirees, 25-34-year-olds and those earning over A$80,000 a year." Westpac expects the RBA will raise rates again at its November meeting.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing