Australia consumer sentiment stuck in the doldrums amid rate jitters

[SYDNEY] Australia’s consumer sentiment slipped in January as households wrestled with renewed rate jitters and an uncertain economic outlook, a private survey showed on Tuesday.

“While confidence is still well above the extreme lows recorded during the protracted ‘cost of living’ crisis in 2022–2024, consumers are becoming more concerned about what 2026 may bring for family finances and the wider economy,” said Westpac’s head of Australian macro-forecasting, Matthew Hassan.

“The main catalyst continues to be a sharp turn in interest rate expectations.”

The Reserve Bank of Australia, which cut interest rates three times last year to 3.6 per cent, has signalled the current easing cycle could already be over as inflation surged.

Two of the big four Australian banks - the Commonwealth Bank of Australia and the National Australia Bank - have tipped a rate hike next month.

The breakdown of the survey showed the outlook for family finances over the next year fell 4.5 per cent to 97.8. The measure of the economic outlook for the next 12 months dropped 6.5 per cent to 88.4.

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Nearly two-thirds of consumers expect mortgage rates to move higher over the next 12 months, more than double that in September.

The measure of whether it was a good time to buy a major household item rose a small 0.2 per cent to 99.1. REUTERS