Easing Price Pressures & On Hold RBA Make Consumers Feel Better

Westpac consumer confidence jumped 6.2% to 86.0 in February to its highest since June 2022, the month following the first rate hike this cycle. Sentiment was boosted by lower-than-expected Q4 inflation reported at the end of January and the RBA being on hold again at its February meeting. Households remain depressed but are gradually feeling more positive following the trough a year ago.

• Despite the RBA keeping its options open for another hike, those expecting a rate hike in the next year fell 10pp to 42%. The figure was 61% in December. Declining tightening expectations are helping confidence to recover.
• The time to buy index also jumped 11.3% in February, which is good news for retailers.
• Family finances and the economic outlook both improved. And households continue to expect house prices to rise with the index up 2.1% m/m to a new cycle high.
• The survey included the split by political affiliation and it showed a very divided view of the economy with Liberal/National supporters on 77.6 but Labor voters showing more optimists than pessimists on 103.8.