Australia Consumer Sentiment Turns Sour After Rate Hike

Australia Consumer Sentiment Turns Sour After Rate Hike by Ashly Chole last updated on June 16, 2023

Australia's Consumer Sentiment Turns Sour After Rate Hike

After the rate hike from the RBA, the consumer sentiment in Australia turned sour, which tells us not everything is alright. According to a recent survey, Australian consumers are worried about unemployment if the current pace of rate hikes continues.

It appears that the Australian government is creating more problems in the form of unemployment in an attempt to control inflation. In the end, unemployment will hurt Australian citizens a lot more than inflation alone!

Australia: Consumer Sentiment For June Is 79.2

According to the Melbourne-based institute, the consumer sentiment index increased 0.2% during June and reached 79.2 points. This has brought the index even closer to the recession lows and tells us that the public is pessimistic about economic prospects.

On the other hand, the number of people who are optimistic about economic conditions in Australia are shrinking. Overall, the recent survey doesn't paint a good picture, as deteriorating consumer sentiment ultimately affects consumer spending.

Experts believe that the small improvement in the index this month is just masking an even bigger problem caused by the recent rate hike. Just a few days ago, the RBA lifted its interest rate once again, which pushed the sentiment index to 72.6.

Before the rate hike, the same index was recorded at 89.0 which suggests that the recent rate hike has seriously damaged the consumer sentiment in Australia.

That's why it wouldn't be wrong to say that the interest rate hike had a serious impact on the survey respondents, according to the Westpac economist.

Earlier, one of the good things in the consumer sentiment survey was the optimism related to jobs. But after the recent survey, it appears that even that is slowly fading away.

In short, things are not looking good and the RBA must take serious action before things start to get out of hand.