Investing.com - Australia's Westpac-Melbourne Institute Consumer Sentiment Index came in at 2.9% this month, despite the challenging economic conditions. However, at a level of 82, the index remains significantly low, aligning with an observed decrease in per capita spending.
There are minor signs of optimism around family finances and employment prospects, but concerns over potential interest rate hikes are casting a shadow over these improvements. The Reserve Bank of Australia's (RBA) ongoing pause on rate hikes has only marginally improved sentiment, with 63% of those surveyed after the October RBA decision still expecting mortgage interest rates to rise over the next year.
The Reserve Bank Board's next meeting on November 7 will reveal how the Bank is reviewing the outlook and how the balance of risks may be shifting. The September quarter CPI, due on October 25, will also be closely watched by market participants.
Regarding the economy, consumers remain less optimistic about near-term prospects. The 'economic outlook, next 12 months' sub-index dipped 0.2% to 78.3. However, the 'economic outlook, next five years' sub-index rose 2.1% to 92.4, suggesting consumers are confident that the current cost of living pressures will eventually be managed.
On the housing front, the 'time to buy a dwelling' index rose 4.8% in October, but remains at historically low levels. The Westpac Melbourne Institute House Price Expectations Index rose 3.8% to 160.4, hitting a new cycle high, with nearly 70% of consumers expecting price increases over the next 12 months.