Key facts
- Australian consumer sentiment index fell 2.9% in June to 80.6.
- The June reading is among the weakest in the survey's 50-year history.
Australian consumer sentiment dropped 2.9% in June to 80.6, reaching near historic lows. Rising interest rates, higher petrol prices, and concerns over tax changes impacting housing investments squeezed household finances, according to a Westpac-Melbourne Institute survey.
The significant drop in Australian consumer confidence signals potential headwinds for economic growth, as reduced spending power and negative sentiment can lead to lower consumption and investment.
Consumer sentiment in Australia declined in June, with the Westpac-Melbourne Institute index falling 2.9% to 80.6. This marks one of the lowest readings in the survey's 50-year history, indicating a significant imbalance between optimists and pessimists.
The downturn was attributed to a combination of factors, including three interest rate hikes by the Reserve Bank of Australia this year and a surge in petrol prices. These pressures have squeezed household finances and dampened expectations for family finances.
Furthermore, consumers appear increasingly unsettled about the potential impact of recently announced tax changes aimed at reducing tax breaks for property investors. This has led to a sharp drop in house price expectations. The sub-index measuring the 'Time to Buy a Major Item' edged up slightly but remains well below its long-term average.
Matthew Hassan, Westpac's head of Australian macro-forecasting, noted the historical weakness of the current sentiment level and highlighted emerging concerns, particularly regarding housing market expectations.