Consumer confidence in Australia has fallen to its lowest level in four years as high living costs and an uncertain economic outlook continue to weigh on sentiment.
Bloomberg reported that a survey released by Westpac on Tuesday (10 November) showed its consumer confidence index fell 2.7% to 78.2 in November, a four-year low. Confidence in the economic outlook for the coming year deteriorated markedly.
Hasan Nasbi, Westpac’s head of Australian macroeconomic forecasting, said Australian consumers remained deeply pessimistic, with rising living costs still their biggest concern.
The Reserve Bank of Australia raised its benchmark interest rate last week to 4.85%, an 18-year high, to bring inflation back within its target range of 2% to 3%. Price pressures in Australia have picked up again since late last year, with surging energy prices triggered by the war between the US and Iran further fuelling inflation.
However, the pessimism has yet to have a significant impact on household consumption. Household spending remains more resilient than the central bank and economists had expected, partly because high household savings have cushioned the impact of interest rate increases and rising prices.
The survey showed that about 38% of consumers planned to spend less on gifts this Christmas, while 46% intended to maintain last year’s level of spending and 14% planned to spend more.
Meanwhile, Australia’s property market continues to weaken. Data from property consultancy Cotality showed that national home prices have fallen 8.1% from their peak in March this year, potentially marking the largest decline in 40 years. Commonwealth Bank of Australia expects prices could fall by about 14% from peak to trough.
Consumers have also become more pessimistic about the outlook for home prices, with the house price expectations index plunging 13.4% to 99.6 in November. Other data showed growing public concern about the economic and employment outlook for the coming year.
