Interest rate hike concerns and rising fuel costs push Australia's consumer confidence index close to extreme pessimism

According to information from Zhihu Finance APP, due to rising fuel costs and concerns that the Reserve Bank of Australia may resume raising interest rates, Australian consumer confidence fell sharply in September, once again approaching the extremely pessimistic range. Westpac said in a statement on Tuesday that the consumer confidence index dropped by 5.2% to 84.4 points. Matthew Hassan, Head of Australian Macroeconomic Forecasting at Westpac, stated: “This decline has brought consumer confidence back to the extremely pessimistic levels seen earlier this year.”

The survey shows that the pressure of living costs has “intensified again,” with the sub-index measuring “family financial situation compared to a year ago” plunging by 9.2%. Hassan pointed out that local petrol prices in Australia have climbed back above 2 Australian dollars per litre for the first time since April. This reflects the impact of rising global energy prices and the end of the temporary halving of the fuel excise tax.

The survey also revealed that about 64% of consumers expect mortgage rates to rise further in the next 12 months. After inflation and GDP data exceeded expectations, the Reserve Bank of Australia is facing pressure to resume interest rate hikes, with its policy meeting in just three weeks. The Reserve Bank of Australia has repeatedly stressed the need to bring the economy back into balance, and from February to May, it raised borrowing costs three consecutive times, lifting the cash rate to 4.35%, and has since held steady.

Hassan said that stronger-than-expected inflation data “has increased worries that the Reserve Bank of Australia will raise rates further in the coming months.” “This has dampened consumers’ expectations for both their personal financial situation and the economic outlook, and may also be heightening concerns about continued weakness in the real estate market.”

The Australian real estate market is in a downturn due to the government scrapping tax incentives for property investors and the impact of previous interest rate hikes. On Tuesday, HSBC Holdings raised its forecast for the peak-to-trough drop in property prices from the previous 8% to 13%. National property price indicators from property consultancy Cotality fell 0.9% in August, marking the fifth consecutive month of decline, bringing the cumulative drop since the peak in March to 3.6%.

Hassan stated: "Rate concerns have had a clear negative impact on consumers with mortgages. Overall confidence among this group has fallen by 14%, with the assessment of ‘whether now is a good time to purchase major household items’ down by 18%, indicating that mortgage holders are tightening their spending plans.”