Investing.com-- Australian consumer sentiment weakened further in early-April, a private survey showed on Tuesday, as fears of slowing economic growth, sticky inflation and higher-for-longer interest rates remained in play.
The Westpac-Melbourne Institute consumer sentiment index fell 2.4% in April, extending a 1.8% decline from the prior month. The index was also close to record lows hit during the 2020 COVID-19 pandemic, Westpac analysts said in a note.
Consumer sentiment was battered chiefly by persistent concerns over sticky inflation and slowing economic growth in Australia. While consumer price index inflation did ease substantially over the past year, it still remained well above the Reserve Bank’s annual 2% to 3% target, and was also a key weight on household finances over the past year.
Sticky inflation is likely to spur higher-for-longer interest rates in Australia- the prospect of which also dented sentiment in recent months. Higher mortgage rates, following a series of aggressive rate hikes by the RBA over the past two years, also weighed on household finances.
Consumers remained largely unconvinced that rate cuts were coming early this year.
Westpac analysts noted a sharp deterioration in buyer sentiment in April- a trend that likely heralds worsening consumer spending as purchasing power grew even weaker.
On the other hand, Australia’s jobs market remained a key point of optimism for consumers, amid low unemployment and a large number of openings.