Australian consumer confidence rebounds in Aug

Australian consumer sentiment improved in August, with the Westpac-Melbourne Institute Index rising 2.8 per cent compared to July. Despite the increase, the overall index reading of 85 still shows more pessimism than optimism.

Westpac senior economist Matthew Hassan attributed the increase to the Reserve Bank of Australia’s (RBA) decision to hold interest rates steady and the positive impact of government tax cuts and other cost-of-living measures.

In particular, consumer confidence in family finances surged 11.7 per cent in August, marking the largest monthly gain in nine years, with low-income earners experiencing the most significant improvements.

Despite the recent rebound, the RBA has signalled that interest rates are unlikely to be cut in the near term due to persistent core inflation. However, market expectations for a rate cut by the end of the year have increased.

The survey also showed a decline in the proportion of respondents anticipating higher mortgage rates in the next 12 months by 14.9 per cent.

While the index measuring consumer attitudes towards purchasing major household items increased by 0.6 per cent, it remains at historically low levels.

Attribution: Reuters, WESTPAC-MI consumer sentiment bulletin

Subediting: M. S. Salama