Australian consumer sentiment stalls with renewed concerns about economy

Australians have ended 2024 with fresh concerns about the outlook for the economy despite consumer mood improving markedly over the year.

Consumers continue to report solid improvements in current conditions, according to the latest Westpac-Melbourne Institute consumer sentiment index on Tuesday, reflecting positive assessments of family finances.

But this was more than offset by a loss of confidence around the outlook, particularly for the economy. Sentiment slipped 2 per cent in December to 92.8 points.

“That likely reflects several factors including a disappointing September quarter national accounts update; ongoing uncertainty around inflation and the potential for interest rate easing; and a more unsettled global backdrop,” Westpac head of Australian macro-forecasting Matthew Hassan said.

“Renewed concerns about the outlook have taken some of the gloss off consumer confidence around jobs.”

Household sentiment has been in the doldrums as a surge in inflation prompted the Reserve Bank to raise the cash rate to 4.35 per cent, where it has remained for the whole of this year.

“Consumer sentiment towards housing deteriorated in December, with homebuyer sentiment falling back to very pessimistic levels and price expectations continuing to soften,” Mr Hassan said.

But he said there were more promising signs for retailers that buyer sentiment was starting to recover.

Westpac’s ‘time to buy a major household item’ sub-index registered a significant improvement in December to hit a two-and-a-half year high.

CreditorWatch chief economist Ivan Colhoun said deterioration in the economic outlook likely reflected uncertainty about US President Donald Trump’s widely-reported proposed significant tariff and immigration policy changes.