Key insights
- Australian consumer sentiment plummeted due to rising fuel prices from the Iran conflict and interest rate hikes. This highlights the potential for geopolitical events and inflation to negatively impact consumer confidence globally, which could foreshadow similar trends in the US if comparable conditions arise.
SYDNEY, April 14 (Reuters) - Australia’s consumer sentiment slumped in April to its lowest in more than two years, a survey showed on Tuesday, as consumers seem to be unnerved by the impacts of the Iran conflict on the economy and future inflation.
A Westpac-Melbourne Institute survey showed its main index of consumer sentiment fell 12.5% to 80.1 in April. A reading below 100 means pessimists considerably outnumber optimists.
“Australian consumers are being hit by another ‘cost of living’ shock," said Westpac’s head of Australian Macro-Forecasting, Matthew Hassan.
"The spike in fuel prices following the U.S.–Israel war on Iran and a further 25bp interest rate increase are again putting finances under intense pressure ... the April sentiment drop is the biggest monthly decline since the onset of COVID pandemic."
All index components deteriorated sharply in April, with the biggest fall seen across components tracking assessments of Current Conditions.
Near-term expectations for the economy and family finances also fell sharply, suggesting consumers were seeing little prospect for improvement and were bracing for more difficulties, the survey said.
The war is having a major dampening effect on buyer attitudes, with the Time to Buy a Major Item sub-index dropping 15% to 83.3.