Australian Consumer Sentiment Dips Further in January

Investing.com — Australian consumer sentiment fell further in January after a drop in the previous month, according to a private survey released on Tuesday, reflecting continued pessimism surrounding the economic outlook at the start of 2025.

The Westpac-Melbourne Institute Consumer Sentiment Index decreased by 0.7% to 92.1 in January, following a 2% decline in December.

Despite a more optimistic stance compared to a year ago, concerns regarding finances and unemployment dampen the mood. Notably, confidence in family finances compared to a year ago plummeted 7.8%, contributing significantly to the index’s decline due to increasing household budget pressures, the survey revealed.

Luci Ellis, Chief Economist at Westpac Group, stated in a report: “The consumer mood has soured for two months consecutively and remains on the pessimistic side. The survey results were weaker later in the survey period than in the first two days. However, sentiment is still less negative than a year ago, and some components suggest that consumers expect things to improve from here.”

Confidence in job security continues to weaken, despite recent official data indicating low unemployment and rising job vacancies, as reported by Westpac.

The outlook for interest rates remained steady in January, with the Westpac-Melbourne Institute Mortgage Rate Expectations Index slightly dipping from 105.8 in December to 105.7.

This stability implies a diminished urgency for major rate changes by the Reserve Bank of Australia (RBA). The RBA is set to meet in February, with markets expecting to maintain current rates. However, any unexpected actions, especially amid ongoing cost-of-living pressures, could significantly alter these subdued expectations.