Australia Consumer Sentiment Falls Sharply

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index dropped 2.6% mom in February 2026 to a ten-month low of 90.5, extending January’s 1.7% fall and marking the third straight monthly decline. The latest result highlighted inflation concerns and the impact of the central bank’s 25bp rate hike earlier this month, the first in over two years. Household finances weakened further, with assessments down 4.7% to 78.8 compared with a year earlier, and expectations for the next 12 months slipping 0.1% to 97.7. Meanwhile, views on economic conditions over the next year edged up 0.1% to 88.5, but the five-year outlook fell 2.5% to 94.1. The “time to buy a major household item” index shrank 5.6% to 93.5. Unemployment expectations added 0.3% to 129.8, in line with historical averages. Westpac’s Mathew Hassan said that while another RBA rate hike cannot be ruled out, the board is likely to wait for more data at the March 16–17 meeting, with the next 25bp move potentially coming in May.

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index slipped 1.7% mom in January 2026 to a three-month low of 92.9, extending December’s sharp 9.0% plunge as shifting interest rate expectations weighed on confidence. Sentiment showed mixed signals: the one-year economic outlook fell 6.5% to 88.4, while the five-year view edged up 0.9% to 96.5. Household finances also diverged, with assessments rising 2.3% to 82.7 compared to a year ago, but views for the next 12 months fell 4.5% to 97.8. The “time to buy a major household item” index edged up 0.2% to 99.1. Meanwhile, views on unemployment worsened, with the index climbing 2.1% to 129.4, slightly above its long-run average, signaling rising concern over job prospects. Westpac’s head of Australian macro-forecasting, Mathew Hassan, said consumers are increasingly wary about 2026, noting that recent strong inflation and resilient domestic spending have heightened fears that cost pressures are not yet under control.

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index plunged 9.0% mom to 94.5 in December 2025, slipping back below the 100 mark after briefly returning to optimism in November for the first time since February 2022. The decline followed a 12.8% surge in the prior month, due to growing worries about inflation. Economic sentiment weakened, as the one-year outlook slid 9.7% to 94.6 and the five-year view fell 11.7% to 95.7. Household finances were also a drag, with views on conditions compared with a year ago dropping 5.0% to 80.9, while expectations for the next 12 months eased 6.1% to 102.4. The “time to buy a major household item” index declined 11.4% to 98.9. Still, views on unemployment improved, down 9.1% to 126.8. Westpac’s Mathew Hassan said renewed anxiety over the interest-rate path was feeding broader concerns about the economic outlook. He cautioned that if inflation takes longer to normalise, the cash rate could stay on hold for longer than currently expected.