January saw Australian consumer confidence slip deeper into pessimism, according to the Westpac‑Melbourne Institute Consumer Sentiment Index. The gauge dropped 1.7 points to 92.9, below the 100 threshold that separates optimism from gloom. Households cited rising worries about interest rates, with nearly two‑thirds now expecting mortgage costs to climb over the next year—double the share recorded in September.

Expectations for family finances and the broader economy fell 4.5% and 6.5% respectively, reflecting uncertainty about 2026. Job outlook also dimmed; a larger share of respondents anticipate higher unemployment, echoing signs of a softening labour market. Despite the downturn, confidence remains above the lows of the 2022‑2024 cost‑of‑living crisis.

Analysts expect the Reserve Bank of Australia to keep rates steady at its February meeting and likely through the rest of 2026, a stance that could temper further sentiment erosion. Policymakers will watch these readings closely as consumer spending drives much of Australia’s growth.