Australia’s consumer confidence plunges on RBA tightening signal
AUSTRALIA’S consumer confidence tumbled as mounting cost of living pressures and little prospect of a pause in interest-rate increases squeezed household finances.
Consumer sentiment slid 6.9 per cent to 78.5, signalling pessimists heavily outweigh optimists with a dividing line of 100, a Westpac Banking survey showed on Tuesday (Feb 14). Senior Economist Matthew Hassan pointed to stronger-than-expected inflation together with a “resumption” of tightening for the gloomy outcome.
“Given that the move was widely anticipated, the negative response likely reflects the clear signal from the RBA governor that further increases can be expected in the months ahead,” Hassan said in a statement.
The Reserve Bank of Australia (RBA) has raised rates by 3.25 percentage points since May to the current 3.35 per cent, the highest level since late 2012. Governor Philip Lowe last week signalled further tightening ahead and economists predict a peak rate of 3.85 per cent BY May.
The “family finances vs a year ago” sub-index dropped 8 per cent in February, to 62.1 — weakest reading since the depths of the early-1990s recession, Hassan said. The index read among consumers with a mortgage was just 55.4, down 14.4 per cent since January.
“These are amongst the bleakest responses on this question in the history of the survey, which goes back to the mid-1970s,” he said.
The ‘family finances, next 12 months’ subindex recorded a 6.7 per cent fall to 86.8. BLOOMBERG
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