By Paul Hayes
MELBOURNE, VIC: Australian consumer confidence has had its largest fall since the onset of the global financial crisis, according to new data released this morning.
The Westpac–Melbourne Institute Consumer Sentiment Index fell to 108.0 in May, a 7 per cent dip from the April index number of 116.1.
The results represent the second consecutive fall in consumer sentiment, as well as the largest since October 2008.
According to Westpac’s chief economist, Bill Evans, the fall in confidence and spending can be largely attributed to consecutive rising interest rates and the recent federal budget.
“This survey was conducted after the release of the Federal Budget and the 25bp (base points) increase in the Reserve Bank’s overnight cash rate.
“The result indicates that the response to the budget was negative on balance but we expect that the most important factor causing such a large fall in the headline index was the rate hike.”
These latest index results serve to quantify the downbeat sales numbers coming from most Australian retailers in recent weeks, with David Jones today reporting flat sales figures, while Harvey Norman, JB Hi-Hi and Woolworths all recently reported negative results.
Clive Peeters went into a trading halt this morning pending discussions with financiers after shedding almost half its share price in recent weeks.
In addition to the string of interest rate rises, retailers have also pointed to the economy cycling out of last year’s stimulus payments, which had a larger impact in retail sales that was originally thought.