Inflation Remains Main Issue For Consumers

Westpac’s consumer sentiment for December rose 2.7% to 82.1, the highest level since April, in a month where the RBA left rates unchanged. It is one point higher than the 2023 average and hasn’t deteriorated over H2 this year in line with data showing stagnating consumption. The level remains depressed though and Westpac reports that 2023 was the second worst year since 1974.

• The RBA’s December pause boosted sentiment with the index rising 5.4% between responses taken before and after the meeting. But 60% of those surveyed after the decision believe that rates will rise again next year, which is down from 73% in November but still elevated.
• Inflation remained the most recalled of news topics with 55% of respondents noticing it. It has been the main issue for two years now and by “a wide margin”. The “budget and taxation” had the second highest recall at 35%, followed by the economy with 32%, employment 29% and rates 23%.
• Consumers were more optimistic on the medium- to long-term outlook for the economy and their own finances. But inflation continues to weigh on buying intentions with the “time to buy a major household item” down 3.8% in December.
• Unemployment expectations fell 1.2% and Westpac observes that it continues to remain around the historical average.
• In terms of housing, “time to buy a dwelling” rose 1.6% but is still very weak. It rose almost 20% post the RBA decision. House price expectations rose 0.7%.

Source: MNI - Market News/Refinitiv