Australia’s consumer sentiment index fell to 80.4 points in October after the Reserve Bank of Australia raised the cash rate to 4.6 per cent, its highest level in 15 years. The Westpac-Melbourne Institute index dropped 4.7 per cent from the previous month. It hasn’t been this low since April.
The Rate Rise and the Reading
The cash-rate increase came last week. Among the 40 per cent of people surveyed after the rise, confidence plunged 20 per cent to 67.2 points. That group’s reading was the worst this century, according to the reported figures.
The broader index also reached a historic low. It was described as the lowest since the 1990s recession, including the early 1990s recession, and as a 30-year low. The survey figures distinguish the overall result from the reading among people questioned after the rate increase: the former fell 4.7 per cent to 80.4 points, while the latter fell 20 per cent to 67.2 points.
The index records a sharp loss of consumer confidence following the RBA’s decision. The reported figures don’t identify individual respondents or divide results by income, occupation or employment status. They show the scale of the fall in the overall measure and the steeper decline among those surveyed after the cash-rate rise.
Political Pressure
The fall signalled mounting voter unease and discontent with the Albanese government’s economic management. It also dealt Treasurer Jim Chalmers a fresh blow. The figures place declining consumer confidence alongside political dissatisfaction, but the reported account doesn’t provide a breakdown of voter views or say which economic concerns shaped each respondent’s assessment.
The sequence is clear. The RBA raised the cash rate to a 15-year high last week, and the October sentiment index fell, with the sharpest drop among people surveyed after the increase. The index doesn’t provide figures on household debt, mortgage payments, wages, prices or business profits. The reported data include no such measures.
Growth Warnings
The reporting also cited fresh warnings that years of sluggish growth lie ahead. Those warnings add a longer-term concern to the immediate decline in the sentiment measure, but no growth forecast, named forecaster or numerical estimate appears in the provided account.
The available figures show a national index at 80.4 points, down 4.7 per cent from the previous month, and a post-rate-rise survey group at 67.2 points, down 20 per cent. The first was the lowest since April; the second was the worst reading this century. The broader result was characterized as the lowest since the early 1990s recession and as a 30-year low. Together, the reported measures record a steep fall in confidence after the cash rate reached 4.6 per cent, alongside voter unease about the government’s economic management and warnings of sluggish growth.