Consumer confidence in Australia deteriorated sharply: households are increasingly concerned about their financial situation, economic outlook and employment amid mounting cost-of-living pressures, according to Westpac data published on Tuesday.
The Westpac-Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4 from 84.4 in September, missing the forecast 1.2% decline, which would have put the index at around 83.4. The reading of 80.4 was also one of the lowest since the survey began in the early 1970s.
Westpac noted that the Reserve Bank of Australia's latest rate increase, to 4.6%—the highest level since 2011—appears to have sharply undermined consumer confidence.
Among the 60% of respondents surveyed before the rate decision, the sentiment index stood at 86.9. But among those surveyed after the announcement, it plunged to 67.2.
The nearly 20% gap between the pre- and post-meeting samples was the largest since Westpac began tracking survey results daily in 2019.
Fuel prices have also become a significant drag: average weekly petrol prices rose above A$2.30 per litre, almost 25% higher than at the start of the year. Meanwhile, Westpac forecasts that the standard variable mortgage rate will exceed 9%.
Westpac said pessimists outnumbered optimists in 102 of the 106 consumer groups covered by the survey, while more than 80% of consumers expect mortgage rates to rise over the next year.
The report also found growing concern about the employment outlook, suggesting that pressure on household finances is extending beyond inflation and borrowing costs.