Retail

Consumer sentiment in Australia takes a dip in March 2024

28 Mar '24

2 min read

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Insights

Australian consumer confidence dipped to 84.4 in March 2024 from 86 in February 2024, according to Westpac Melbourne Institute.
Despite reduced inflation concerns, economic outlook worries persist, with minor optimism for the next 5 years.
The Reserve Bank of Australia's rate decision impacted sentiments, while job outlook remains stable.

Australia saw a slight decline in consumer confidence, with the consumer sentiment index dropping 1.8 per cent to 84.4 in March, down from 86 in February, according to the latest findings from the Westpac Melbourne Institute. Despite some initial signs of optimism, the mood among consumers remains largely pessimistic, reflecting growing concerns about the near-term economic outlook.

The March survey highlighted that progress in lifting the pervasive consumer gloom of the past two years is, at best, sluggish. Consumers' apprehensions about the economy’s future continue to dampen sentiment, overshadowing any minor improvements noted in certain areas.

A glimmer of hope is observed in how consumers perceive news related to inflation and the cost of living. While inflation continues to be a dominant topic, the intensity of concern has lessened, with 43 per cent of respondents recalling inflation news, down from over 60 per cent in the previous year. The perception of inflation news has shifted, with 51 per cent now viewing it as unfavourable, a significant improvement from 74 per cent last year, as per Westpac.

Other news topics, including budget and taxation changes, employment, and interest rates, are also being received more positively than in December. However, perceptions around ‘economic conditions’ have soured slightly, likely influenced by disappointing national accounts figures for the December quarter.

The detailed analysis of the survey's sub-indexes reveals a mixed picture, with four out of five showing declines. The most significant drop was seen in the ‘economic outlook, next 12 months’ sub-index, which fell by 4.5 per cent.

In contrast, the ‘economic outlook, next 5 years’ sub-index offered a rare positive note, rising by 1.1 per cent to reach 94, slightly above the average of 92.

The survey also captured the impact of the Reserve Bank of Australia’s (RBA) recent decision on interest rates, with a marked difference in sentiment before and after the announcement. Sentiment stood at 94.9 prior to the RBA's decision but plummeted to 79.3 post-decision. This swing mirrors the reaction observed in February, underscoring the significant influence of monetary policy on consumer expectations.

On a brighter note, the outlook for jobs remains relatively stable, with the Westpac-Melbourne Institute unemployment expectations index increasing by 1 per cent to 128.1, aligning closely with the historical average. This indicates a general expectation of a softening in the labour market rather than a dramatic increase in unemployment.

Fibre2Fashion News Desk (DP)

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