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Australian consumer sentiment dips in March: survey
[SYDNEY] A measure of Australian consumer sentiment dipped from 13-month highs in March as concerns about proposed budget measures and taxation tempered the favourable effect of lower interest rates.
Wednesday's survey of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment slipped a seasonally adjusted 1.2 per cent in March.
Still, the dip only unwound a little of February's sharp 8.0 per cent gain which followed a cut in interest rates early that month. The index reading of 99.5 matched the reading from March last year, showing pessimists just slightly outnumbering optimists. "Some softening in sentiment was always likely in March given the big lift last month following the rate cut," said Westpac senior economist Matthew Hassan.
The Reserve Bank of Australia (RBA) lowered rates by a quarter point to a record low of 2.25 per cent in early February and left the door open for further easing if needed.
Survey respondents recalled news about the budget and taxation, economic conditions and employment as being mostly unfavourable.
The Liberal National government of Tony Abbott has spent weeks arguing that tough measures would be needed to deal with the budget deficit over time.
Yet, Mr Hassan noted respondents were not as pessimistic as they were at the end of last year. "The overall message seems to be that while consumers remain very concerned about the outlook for the economy and job security, they are less concerned than they were in December and acknowledge the more positive situation around interest rates,"said Mr Hassan.
Individual measures in the March survey were mixed. The index of family finances compared to a year ago rose 1 per cent, but that for the next 12 months fell 1.9 per cent.
The survey's index for economic conditions over the next 12 months edged up 0.3 per cent.
The greatest weakness was shown in the index on whether it was a good time to buy a major household item which fell 5.1 per cent in the month. "March's reading is the second weakest since 2009," noted Mr Hassan. "It is very likely that at least part of this decline is a reaction to recent falls in the Australian dollar and the impact this is expected to have on the cost of imported goods." There was a slight pullback in the outlook for house prices and whether it was a good time to buy a home. Yet 61 per cent of respondents expected home prices to rise over the next year.