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.
- Rising borrowing costs and higher petrol prices contributed to the decline.
- Consumers are increasingly unsettled about the impact of recent tax changes on housing.
- Expectations for family finances and the longer-term economic outlook worsened.
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.