SYDNEY (Reuters) – Australian consumer confidence fell for a second month in January as financial stress dominated the start of the new year, a survey showed on Tuesday, suggesting spending will remain subdued in the near term.
The Westpac-Melbourne Institute’s consumer confidence index fell 0.7% in January from December, when it fell 2.0%. The index was still 13.8% higher than a year ago, but at 92.1 it appeared that the pessimists again outnumbered the optimists.
The cautious outlook should reassure the Reserve Bank of Australia that consumers have no intention of rushing their spending and fueling inflation, leaving the door open for some monetary policy easing in coming months.
The survey’s analysis found that the biggest stumbling block was the assessment of household finances compared to a year ago, which fell by 7.8% to 77.7% in December, as high mortgage rates offset the impact of the 2024 tax cuts .
If anything, the outlook was brighter: the index of household finances for the next 12 months rose 1.1% to 104.4, showing that the optimists were in the majority.
“Consumer sentiment has deteriorated for two months in a row and remains pessimistic,” said Westpac chief economist Luci Ellis. “However, sentiment is still less negative than a year ago and some components suggest consumers expect things to continue to improve from here.”
The economic outlook for the next 12 months was flat in December, while the outlook for the next five years rose 0.7%.
The measure of whether it was a good time to buy a major household item rose 1.8%, although it remains historically weak at 90.8.
(Reporting by Wayne Cole; Editing by Jamie Freed)
