Australian Consumer Sentiment Drops to Six-Month Low Amid Inflation Concerns

Australian consumer sentiment declined for the second consecutive month in October, with Westpac's index falling 3.5% to 92.1, reflecting growing concerns about the cost of living and family finances amid persistent inflation and uncertainty over further interest rate cuts by the Reserve Bank of Australia (RBA). Despite earlier optimism due to three RBA rate cuts earlier in the year, consumers are now less confident about their financial outlook, with near-term economic expectations weakening and cautious spending impacting sectors like retail, electronics, and home goods. The survey showed a marked drop in the view of whether it is a good time to make major purchases, underscoring subdued consumer demand. While the RBA's decision to pause rate hikes helped ease some fears, over half of respondents still expect mortgage rates to rise in the next year, which contributes to the cautious sentiment. This trend aligns with a broader regional outlook where inflation pressures and cautious consumer behavior threaten economic growth and business investment, as firms also report lowered confidence and are reducing staff and investment due to weak demand and stalled growth. The ongoing inflation and economic uncertainty suggest that consumer and business sentiment may remain subdued, affecting Australia's economic recovery and retail sector in the near term.