Investing.com - Despite the Reserve Bank of Australia (RBA) holding off on increasing rates for the third consecutive month, Australian Westpac Consumer Sentiment experienced a decline in September. The economic outlook and family finances remain areas of concern for consumers.
The Westpac-Melbourne Institute's consumer sentiment index for September recorded a 1.5% dip from August, resulting in a score of 79.7. This indicates a higher number of pessimists compared to optimists. The index has been consistently below the neutral 100 mark since March 2022, marking the longest period of such low sentiment since the recession of the early 1990s.
One of the reasons the RBA decided to maintain the rates at 4.1% last week was the observed slowdown in consumer spending. However, the bank did issue a warning that a rate hike might be necessary in the future to control inflation.
The decision to pause rate hikes for the third month in a row did manage to uplift the confidence among those with mortgages, with a 7.8% increase recorded for the month. But this was counterbalanced by a 6.1% decrease among renters and a 5.8% drop among consumers who own their homes outright.
According to Westpac's Chief Economist, Bill Evans, the survey reveals ongoing pressures on family finances. He noted, "The cost of living remains the key negative for confidence in this cycle. While the 'threat' of rising rates is expected to ease further, a sustained recovery in confidence will only emerge when households are much more comfortable with the cost of living."
The survey indicated a 4.4% drop in confidence regarding family finances. Moreover, a metric assessing whether it was a good time to purchase a major household item also fell by 3%.