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

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.

Australia’s Westpac–Melbourne Institute Consumer Sentiment Index rose 1.2% mom to 91.6 in March 2026, reversing a 2.6% drop in the prior month and marking the first rise since last November. Household finances were mixed, with assessments up 1.8% to 80.2 compared with a year earlier, but expectations for the next 12 months edged down 0.1% to 97.6. Views on economic conditions over the next year fell 2.9% to 85.9, but the five-year outlook gained 2.4% to 96.3. The “time to buy a major household item” index strengthened 4.9% to 98.0. Unemployment expectations added 3.8% to 134.7. Westpac economist Matthew Hassan said domestic developments have been mixed, with 2025 growth exceeding the central bank’s expectations, though the latest survey suggests consumer momentum is cooling. He also noted rising global uncertainty has disrupted energy supplies and clouded the growth outlook. On balance, Westpac expects the RBA to hold rates in March, with any potential hike likely pushed further out.