Australia Consumer Mood Recovers from 2-1/2-Year Low

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index dropped 3.5% month-over-month to 80.6 in June 2026, reversing May’s gain and marking its fourth decline this year. Cost-of-living pressures remained the dominant drag, with the temporary halving of the fuel excise tax offering only fleeting relief. Household finances weakened sharply: assessments versus a year ago dropped 7.5% to 67.3, while 12-month expectations slid 8.5% to 85.1. Views on the broader economy were mixed, with the one-year outlook up 4.9% to 77.8 but the five-year measure down 3.2% to 86.5, a three-year low. The “time to buy a major item” index rose 0.9% to 86.4, and unemployment expectations edged down 0.1% to 139.8. Westpac economist Matthew Hassan said the impact of three rate hikes this year is increasingly evident, but inflation remains the immediate concern, with energy costs yet to fully feed through. While a pause is possible at the next meeting, Westpac expects further tightening in the year.

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index rose 3.5% in May to 83.0, rebounding from April’s 2-1/2-year low of 80.1. The rebound was supported by the government’s temporary halving of the fuel excise tax, cushioning households from the central bank’s third 25bp hike this year in early May. Household finances showed improvement, with assessments versus a year earlier up 9.0% to 72.8 and 12-month expectations climbing 10.7% to 93.0. The “time to buy a major item” measure gained 2.8% to 85.6, while job-loss fears eased 5.2% to 140.0. Sentiment toward the broader economy weakened, however, with the one-year outlook down 1.5% to 74.2 and the five-year view slipping 2.2% to 89.3, the weakest combined reading since November 2022. Westpac economist Matthew Hassan said the budget’s impact was mixed, warning that inflation risks, particularly from rising energy costs feeding into other prices, could keep pressure on the Reserve Bank to tighten further.

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index plunged 12.5% mom to a 2-1/2-year low of 80.1 in April 2026, reversing a 1.2% rise in March. The sharp drop was driven by a surge in fuel prices amid the U.S.–Israel conflict with Iran, as well as a further 25bp rate hike by the Reserve Bank. Household finances weakened sharply, with assessments vs a year ago down 16.7% to 66.8, and expectations for the next 12 months fell 13.9% to 84.0. Meanwhile, views on economic conditions over the next year dropoed 12.4% to 75.3, and the five-year outlook eased 5.1% to 91.4. The “time to buy a major household item” index slid 15.0% to 83.3. Job loss fears climbed 9.7% to a 5-1/2-year high of 147.8. Westpac economist Matthew Hassan noted the current shock is weighing more heavily on labour market expectations than the 2022–24 'cost-of-living crisis'. He expects the central bank to stay focused on inflation, forecasting a 25bp hike in May, with further tightening later this year.