According to the Westpac Consumer Sentiment Index, Australia’s consumer sentiment dropped by 1.1% in July. The index fell to 82.7, showing increased concerns about inflation and interest rate hikes. The Mortgage Rate Expectations Index jumped by 12.8% in July.
This was the biggest monthly increase since early 2022. The index has risen by 30% over the last three months.
Consumer sentiment declines in July.
It went from 122.8 in April to 159.2 in July. This is well above the historical average of 143.8. Nearly 60% of consumers expect mortgage rates to increase over the next year. The Reserve Bank of Australia (RBA) will meet on August 5–6.
Westpac thinks the RBA will keep interest rates the same if inflation continues to fall as expected. The upcoming Q2 Consumer Price Index (CPI) and labor market data will be important for their decision. As consumers deal with economic uncertainty, it’s important to closely watch inflation trends and interest rate policies in the coming months.
