By James Glynn
SYDNEY–A further rise in Australian interest rates last week has reignited fears among consumers about strained household finance and the surging cost of living, with consumer sentiment falling sharply in November to deeply pessimistic levels.
The Westpac-Melbourne Institute Index of consumer sentiment declined 2.6% to 79.9 in November, down from 82 in October.
Westpac senior economist Matthew Hassan said the decision by the Reserve Bank of Australia last week to announce its 13th rise in the official cash rate to 4.35% from 4.10% slammed confidence readings.
“The RBA’s November rate hike has put renewed pressure on family finances and reignited concerns about both the rising cost of living and the prospect of further rate rises to come,” he said.
With the RBA on hold since June, recent months’ data had been showing some tentative signs that sentiment might be starting to lift out of the deep pessimism that has prevailed since the middle of last year, he added.
Consumers remain wary of the potential for more rises.
Amongst those surveyed after the RBA decision, 73% expect mortgage interest rates to move even higher over the next 12 months, the data showed.
That compares to 63% last month and 48% in September and is comparable to the reads seen back in May, June and July.
Only 4% of consumers expect rates to be cut over the next year, down from 15% in September, according to the survey.
Write to James Glynn at [email protected]
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