Quick Bites | Australian consumer sentiment remains weak

The Westpac-Melbourne Institute Consumer Sentiment index in Australia rose 2.7% to 82.1 in December 2023 from 79.9 in November. A reading above 100 indicates optimism and a reading below 100 indicates pessimism.

Australian consumer sentiment remains weak and marks its second-worst year on record. Driving factors are the surge in the cost of living and sharply higher interest rates. The index held below the neutral 100 mark since March 2022, the longest streak since the early 1990s recession. The current level is low in a historical context, with the 10-year average reading at 96.6.

Meanwhile, the Reserve Bank of Australia’s decision to keep interest rates unchanged in December lifted sentiment slightly. Matthew Hassan, senior economist at Westpac said: “The RBA’s decision to leave rates on hold at its final meeting of the year has eased concerns that further hikes are imminent. However, this is small comfort for Australian consumers that have seen incomes come under extraordinary pressure from a surge in the cost of living, sharply higher interest rates and a rising tax take.”

Source: Goldman Sachs

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