Australia consumer confidence bounced in July, before new oil spike

[SYDNEY] A measure of Australian consumer sentiment rebounded in early July as a retreat in petrol prices boosted family finances, though prices are now climbing again amid new hostilities in the Middle East.

A Westpac-Melbourne Institute survey showed its main index of consumer sentiment rose 4.1 per cent in July from June, when it fell 2.9 per cent. The index reading of 83.9 indicated pessimists greatly outnumbered optimists.

“The latest Index read is still in the bottom 10 per cent of results over the 50-year history of the survey,” said Westpac’s head of Australian macro-forecasting, Matthew Hassan.

“Sentiment also remains hostage to developments abroad with daily responses showing a significant weakening as the situation in the Strait of Hormuz deteriorated over the course of the survey week.”

The survey ran from Jul 6 to Jul 9 and thus closed before the latest spike in global oil prices.

Fuel prices had been easing in recent weeks, helping the survey’s measure of future family finances jump 13.4 per cent in July. However, the outlook on the economy remained gloomy with expectations for the next five years rising a slight 0.7 per cent to 87.1.

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The index measuring whether it was a good time to buy a major household item added only 0.5 per cent to 86.8, far below the long-run average of 123.0.

The mood has been darkened by three rate increases from the Reserve Bank of Australia this year, lifting rates to 4.35 per cent and squeezing mortgage holders.

Around 60 per cent of those surveyed expect mortgage rates to increase further over the next 12 months, though that was down from 66 per cent in June. REUTERS