Australian consumer sentiment slides under rates, petrol pressure

[SYDNEY] A measure of Australian consumer sentiment fell sharply in September, a survey showed on Tuesday (Sep 8), as fears of higher interest rates and a rebound in fuel prices pressured finances and the economic outlook.

A Westpac-Melbourne Institute survey showed its main index of consumer sentiment slid 5.2 per cent to 84.4 in September, reversing almost all of a 6 per cent gain in the previous month. The index was still down almost 12 per cent from a year earlier, with pessimists outnumbering optimists by a wide margin.

“Both fuel prices and interest rates again look to be driving the move,” said Matthew Hassan, Westpac’s head of Australian macro-forecasting. “It has likely also added to unease about the continued weakening in housing markets.”

The survey was taken in the wake of data showing core inflation running above forecasts in July, fanning speculation that the Reserve Bank of Australia would have to raise interest rates for a fourth time this year.

This combined with rising petrol prices to knock the survey’s measure of family finances down a steep 9.2 per cent in September.

A measure of the economic outlook also showed large declines, as did the index on whether it was a good time to buy a major household item.

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Worries about falling house prices weighed heavily on those with a mortgage, where sentiment dived 13 per cent in September, compared with just a 0.6 per cent drop for renters. REUTERS