Australian consumer sentiment slides as rates rise

By Wayne Cole

SYDNEY (Reuters) – A measure of Australian shopper sentiment fell for a ninth straight month in August to depths final seen early within the pandemic as one other hike in rates of interest mixed with the surging price of residing to bitter the nationwide temper.

The Westpac-Melbourne Institute index of shopper sentiment launched on Tuesday slid 3.0% in August from July, when it additionally dropped 3.0%. The index was down 22% from August final 12 months at 81.2, that means pessimists far outnumber optimists.

The grim temper partly mirrored the Reserve Financial institution of Australia’s (RBA) resolution final week to lift rates of interest by one other 50 foundation factors to 1.85%, warning that but extra could be wanted to restrain runaway inflation.

The influence was clear on mortgage holders the place confidence tumbled 8.9%, whereas renters truly firmed 0.2%.

A separate weekly survey from ANZ confirmed a pointy drop of 4.5% in its confidence index that worn out three weeks of positive aspects, at the same time as consumption held up.

“Family spending has been strong regardless of very weak shopper sentiment, with sturdy employment positive aspects, excessive ranges of family saving and a want to journey greater than offsetting issues concerning the rising price of residing,” mentioned David Plank, ANZ’s head of Australian economics.

“It stays to be seen whether or not this divergence between confidence and spending can proceed.”

Rising borrowing prices is including to pressures from increased vitality costs, housing and meals, and noticed Westpac’s measure of whether or not it was a great time to purchase a serious family merchandise slide 8.4%.

The measure of the financial outlook for the following 12 months dropped 8.0%, whereas the outlook for the following 5 years fell 1.0%.

Measures of household funds steadied somewhat after months of decline with funds in contrast with a 12 months in the past edging up 0.1%. The outlook for funds over the following 12 months added 2.3%, however was nonetheless down virtually 18% on the 12 months.

(The story refiles to take away extraneous phrase from lead paragraph.)

(Reporting by Wayne Cole; Enhancing by Shri Navaratnam)