Australian consumer sentiment declined for the third consecutive month in February, falling 2.6% to 90.5, well below the neutral 100 mark. The drop reflects ongoing pressures from higher interest rates and rising living costs, with households growing increasingly concerned about their finances and the broader economic outlook. Expectations of further mortgage rate increases have become widespread, contributing to reduced willingness to make major purchases.
Economists suggest this weakening confidence supports the Reserve Bank of Australia (RBA) pausing rate hikes at its March meeting as it awaits clearer inflation data. However, Westpac economists maintain that if inflation remains elevated in the upcoming quarterly Consumer Price Index (CPI) report, the RBA may resume tightening with a 25 basis point increase in May.
**Why this matters**
Consumer confidence is a key indicator of household spending, which drives much of Australia’s economic activity. Continued declines suggest that consumers may cut back on discretionary spending, potentially slowing economic growth. The RBA’s decisions on interest rates will be closely watched as it balances the need to control inflation with the risk of dampening consumer demand and economic momentum.
Source: NewsData