By Ambar Warrick
Investing.com -- Australian consumer sentiment was unchanged in early-March from the prior month, a private survey showed on Tuesday, but remained pinned at COVID-era lows as the country grapples with high inflation and rising interest rates.
The Westpac-Melbourne Institute Consumer Sentiment index was unchanged at 78.5 in March, but remained close to its lowest level since March 2020, Westpac said in a note.
But the bank also noted that two consecutive months of extremely weak consumer confidence was rare, as consumers grew particularly worried over high inflation.
Consumers also expect the Reserve Bank of Australia (RBA) to keep raising interest rates - a trend that has weighed heavily on the Australian economy in recent months.
Sentiment towards household spending deteriorated sharply in March, Westpac noted, with an indicator of sentiment towards buying major household items at its weakest level since 1974 - when Australia was grappling with a recession.
Consumers grew increasingly hesitant over buying a house, given the rising mortgage rates, while sentiment among renters also grew more negative as high borrowing costs trickled down into higher rents.
While the jobs market remained a single source of optimism in an otherwise bleak environment, consumer sentiment towards employment was also showing signs of wearing down.
The bleak reading on consumer sentiment comes amid increasing economic pressure from a tight monetary environment, as well as a growing cost of living.
But data released last month showed that inflation may have peaked in December, and was likely retreating from recent 30-year highs. Wage growth eased, while economic activity also cooled in recent months - a trend that could see the RBA eventually pause its rate hike cycle.
RBA Governor Philip Lowe recently said that a further cooling in price pressures could see the bank pause by as soon as April. But Westpac forecast that the bank will keep hiking until May.
Still, Westpac's survey was conducted prior to the start of a potential banking crisis in the U.S., which is likely to further dent sentiment in the coming months.