Australian Consumer Sentiment Declines Following RBA Rate Hike

Australian consumer sentiment has significantly declined in October, following the Reserve Bank of Australia's (RBA) recent interest rate hike. The Westpac-Melbourne Institute Consumer Sentiment Index fell by 4.7% to 80.4, marking one of the lowest readings since the survey began in the early 1970s. The sentiment among respondents surveyed after the RBA's decision plummeted to 67.2, a level not seen since the early 1990s recession, indicating a stark shift in consumer outlook.

The RBA raised the cash rate to 4.6%, the highest level since 2011, which has contributed to rising concerns among consumers regarding mortgage rates and living costs. Over 80% of respondents expect further increases in mortgage rates over the next year. Additionally, national average petrol prices have surged above $2.30 per litre, exacerbating inflationary pressures on household budgets.

Despite the negative sentiment, Westpac anticipates that the RBA will implement another rate hike during its upcoming meeting on November 2-3. The bank cites rising fuel costs and inflation risks as key factors influencing this decision. While consumers express worries primarily about the cost of living and interest rates, concerns about job security are also beginning to rise, although they remain below historical peaks.

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Source: KLEA News