Investing.com-- Australian consumer sentiment fell further in January after a drop in the previous month, a private survey showed on Tuesday, reflecting continued pessimism surrounding the economic outlook at the start of 2025.
The Westpac-Melbourne Institute Consumer Sentiment Index fell 0.7% to 92.1 in January. The index had dropped 2% in December.
While sentiment remains more upbeat than a year ago, concerns about finances and unemployment are dampening the mood. Confidence in family finances compared to a year ago plunged 7.8%, the biggest contributor to the index's decline, driven by increased pressure on household budgets, according to the survey.
"The consumer mood has soured for two months in a row and remains on the pessimistic side. The survey results were also weaker later in the survey period than in the first two days. However, sentiment is still less negative than a year ago and some components suggest that consumers expect things to continue to improve from here," Luci Ellis, Chief Economist at Westpac Group said in a report.
Consumer confidence around jobs continues to deteriorate even though recent official data on unemployment has remained low and job vacancies have increased, the Westpac report stated.
Outlook for interest rates remained largely steady in January, with the Westpac-Melbourne Institute Mortgage Rate Expectations Index dipping slightly to 105.7 from 105.8 in December.
This steadiness suggests a reduced sense of urgency about major rate moves from the Reserve Bank of Australia (RBA).
The RBA meets next in February, with markets anticipating a hold on current rates. However, any unexpected moves, particularly against the backdrop of persistent cost-of-living pressures, could significantly influence these subdued expectations.