Australian consumer sentiment dips again in Jan.

Australian consumer sentiment declined for the second consecutive month in January due to financial stress at the beginning of the year, indicating that spending will likely remain low in the near future.

The Westpac-Melbourne Institute consumer sentiment index fell 0.7 per cent in January from December, following a 2.0 per cent drop. Despite being 13.8 per cent higher than a year ago, the index stood at 92.1, indicating more pessimism than optimism.

The cautious consumer outlook should reassure the Reserve Bank of Australia that there is no imminent surge in spending that could fuel inflation, potentially allowing for monetary policy easing in the near future.

The survey breakdown revealed that the main challenge was assessing family finances compared to a year ago, dropping by 7.8 per cent to 77.7 in December due to high mortgage rates overshadowing the impact of tax cuts in 2024.

The future seemed more positive as the index of family finances for the next 12 months increased by 1.1 per cent to 104.4, indicating that optimists outnumbered pessimists.

In December, the survey showed no change in the economic outlook for the next 12 months, but there was a slight increase of 0.7 per cent in the outlook for the next five years.

The measure of whether it was a good time to purchase a major household item increased by 1.8 per cent, although it is still relatively low at 90.8 compared to historical data.

Attribution: Reuters

Subediting: Y.Yasser