SYDNEY, April 14 - Australian consumer confidence sank in April to its lowest level in over two years, according to the latest Westpac-Melbourne Institute survey released on Tuesday. The survey's principal consumer sentiment index fell 12.5% to 80.1 in April. By convention, readings below 100 indicate pessimists considerably outnumber optimists.
Westpac's head of Australian Macro-Forecasting, Matthew Hassan, said consumers were experiencing another "cost of living" shock. He pointed to a spike in fuel prices following the U.S.-Israel war on Iran and a further 25bp interest rate increase as forces that are exerting renewed pressure on household finances. "The spike in fuel prices following the U.S.-Israel war on Iran and a further 25bp interest rate increase are again putting finances under intense pressure ... the April sentiment drop is the biggest monthly decline since the onset of COVID pandemic," Hassan said.
The survey showed broad-based deterioration across all index components in April. The largest falls occurred in metrics that track assessments of Current Conditions. Near-term expectations for the economy and for family finances also declined sharply, suggesting households saw little near-term hope for improvement and were bracing for further challenges.
One barometer of consumer willingness to spend on discretionary purchases fell notably. The Time to Buy a Major Item sub-index dropped 15% to 83.3, pointing to a pullback in appetite for big-ticket purchases amid the heightened cost pressures and economic uncertainty identified by respondents.
Detailed findings
- The main consumer sentiment index decreased 12.5% to 80.1 in April.
- All survey components weakened, with the most pronounced declines in Current Conditions assessments.
- Near-term expectations for both the national economy and family finances fell sharply.
- The Time to Buy a Major Item sub-index fell 15% to 83.3.
Context and immediate implications
The survey indicates households are feeling squeezed by rising costs and recent monetary policy moves. With judgments about current conditions deteriorating and expectations worsening, consumer spending intentions appear to have cooled, particularly for larger purchases.
These shifts in sentiment may have immediate relevance for sectors reliant on household demand, including retail and big-ticket goods, and for fuel-related spending as consumers react to higher prices at the pump.