Westpac Consumer Sentiment Improves, But Still Well Below Neutral Levels

Westpac's consumer sentiment reading rose in June, but the local bank notes we are still well below neutral levels. Westpac states -positive fiscal support is being offset by inflation/interest rate worries, see below for more details.

• Westpac: "Despite the improvement, consumer sentiment remains below its March level and still firmly in deeply pessimistic territory. At 83.6, the Index remains well below the ‘neutral’ level of 100, meaning pessimists outnumber optimists by nearly 20ppts. The survey detail suggests positives from fiscal support measures are being negated by increased concerns about inflation and the outlook for interest rates.
• Two topics stood out in June: ‘budget & tax’ and ‘inflation’, with nearly half of consumers recalling news on each of these. On the former, the news was viewed as less unfavourable than in March, reflecting the well-received Commonwealth budget, the cost-of-living measures delivered by both Federal and state governments, and the stage 3 tax cuts set to commence on July 1. However, the news on inflation was viewed as less favourable than in March, with assessments retracing most of the way back to the levels seen in December, when the RBA had just raised the cash rate in response to persistently high inflation.
• The ‘family finances vs a year ago’ sub-index recorded a particularly strong 9.7% lift in June. However, at 69.3 it remains at a very weak, deeply negative level. This sub-index would need to rise by another 20% just to reach its long-run average level, and by over 40% to get back to the ‘neutral’ level of 100. "