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Investing.com-- Australian consumer sentiment slumped sharply in April, posting its biggest monthly decline since the COVID-19 pandemic as surging fuel costs and rising interest rates weighed heavily on households, a survey by Westpac showed on Tuesday.
The Westpac–Melbourne Institute Consumer Sentiment Index fell 12.5% to 80.1 in April from 91.6 in March, marking a return to deeply pessimistic levels and highlighting renewed cost-of-living pressures across the economy.
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The drop was driven by a sharp rise in fuel prices and expectations of further monetary tightening, with over 80% of respondents anticipating higher mortgage rates over the next 12 months.
Measures of current conditions deteriorated significantly, with the “family finances vs a year ago” sub-index plunging 16.7% to 66.8. The “time to buy a major household item” gauge also dropped 15%, reflecting weakened consumer demand.
Near-term expectations worsened markedly, with views on the economy over the next year falling 12.4%, while expectations for family finances dropped 13.9%.
Job market concerns intensified, with the unemployment expectations index jumping 9.7% to its highest level in over five years, excluding the pandemic period.
While medium-term economic expectations proved more resilient, the survey underscored mounting pressure on household finances, as elevated energy costs and interest rates threaten to dampen spending and growth.
The Reserve Bank Monetary Policy Board will next meet on May 4-5, with analysts expecting another 25bp rate hike in May and further moves likely in the second half of the year.