Australian consumer sentiment slips in Aug amid economic angst

Consumer sentiment in Australia has declined in August as the decision by the Reserve Bank of Australia (RBA) to hold interest rates didn’t alleviate concerns about the economic outlook. The Westpac-Melbourne Institute index of consumer sentiment decreased by 0.4% compared to July, indicating that pessimists outnumbered optimists. This level of sentiment is typically associated with recessions. The RBA’s decision to keep rates at 4.1% was influenced by a slowdown in consumer spending, although it warned that further rate hikes may be necessary to control inflation. The survey conducted by Westpac showed no improvement in sentiment following the RBA decision. Two-thirds of respondents anticipate rate hikes in the coming year, resulting in a sharp decline in sentiment among mortgage holders. The survey also revealed a 4% decrease in the outlook for economic conditions over the next 12 months and a 0.8% dip in the outlook for the next five years. However, there was a slight increase in optimism regarding family finances and the purchase of major household items. Despite a negative sentiment towards buying a house, consumers remained positive about rising house prices, which reached their highest point this year.

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