Investing.com– Australian consumer sentiment fell in December, a private survey showed on Tuesday, reflecting renewed pessimism surrounding the economic outlook, and offsetting continued improvement in household financial conditions.
The Westpac-Melbourne Institute Consumer Sentiment Index fell 2% to 92.8 from 94.6 in November.
While consumers reported greater confidence in their current finances, bolstered by stable interest rates, fiscal support, and rising wealth, future economic expectations soured, according to Westpac.
The ‘economic outlook, next 12 months’ sub-index dropped sharply by 9.6% to 91.2, while the ‘economic outlook, next 5 years’ measure fell 7.9% to 95.9. Both metrics gave back half of their gains from the past two months.
Analysts noted ongoing concerns following soft national accounts data for the third quarter, which revealed subdued gross domestic product (GDP) growth and flat private demand.
“The more unsettled global backdrop may also have weighted on the outlook. Notably, expectations for the economy over both the year ahead and next five years declined across all of the detailed sub-groups tracked in the survey,” Westpac wrote in a note.
On the brighter side, assessments of family finances continued to improve, with the ‘family finances vs a year ago’ sub-index climbing to its highest level since early 2022. Positive financial sentiment, coupled with moderating inflation, is beginning to ease the shock of surging prices, Westpac’s report said.
“Renewed concerns about the outlook have taken some of the gloss off consumer confidence around jobs,” Westpac wrote.
Westpac expects the Reserve Bank of Australia to leave interest rates unchanged at its February meeting, with an easing expected to commence in May.
