Australian consumer sentiment bounces in March, but war looms

[SYDNEY] Australia’s consumer sentiment bounced modestly in early March after three months of retreat, a survey showed on Tuesday, though the mood was steadily darkening as conflict in the Middle East broadened.

A Westpac-Melbourne Institute survey showed its main index of consumer sentiment rose 1.2 per cent to 91.6 in March. The reading below 100 means pessimists still considerably outnumber optimists.

The survey was taken from March 2 to March 6 and responses got gloomier as the week and the US-Israeli war on Iran rolled on.

“Responses from those surveyed in the last three days were consistent with an index read of just 84,” said Westpac’s head of Australian macro-forecasting, Matthew Hassan.

A separate survey of consumers from ANZ out on Tuesday showed a sharp drop in confidence last week as the conflict in the Middle East pushed petrol prices higher.

Inflation expectations saw the largest weekly rise since the series started in 2010, jumping 0.8 percentage points to 6.1 per cent.

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Stubborn inflation had already led the Reserve Bank of Australia to raise its main cash rate a quarter point to 3.85 per cent in February, and warn of further tightening if needed.

The Westpac survey’s measure of family finances compared to a year ago bounced 1.8 per cent, after a steep drop the previous month, while the longer-term outlook eased 0.1 per cent.

Surprisingly, a measure of whether it was a good time to buy a major household item jumped 4.9 per cent, to recover much of the fall suffered in February after the RBA’s rate hike. REUTERS