According to the Westpac-Melbourne Institute, the Consumer Sentiment Index fell by 5.7 per cent in June. This result has surprised economists, especially since the Reserve Bank recently held off on a rate rise.
The Index fell from 108 in May to 101.9 in June. Bill Evans, Westpac chief economist, commented on the results.
“Following the 7 per cent fall in May, the cumulative 12.3 per cent fall in the Index over the last two months represents the largest two month fall since March 2008,” he said.
“At that time the Reserve Bank had raised rates on two consecutive occasions pushing the variable mortgage rate to 9.35 per cent and the global financial crisis was deepening.”
Unlike most months, Evans said that the June decline can not be blamed on interest rate rises.
“Instead it seems to reflect a mixture of concerns about deteriorating conditions abroad, financial market turmoil and uncertainty around the Government’s proposed Resource Super Profits Tax.”
In slightly better news, Evans said that consumers spending intentions did not suffer as much of a decline.
“The spending intentions measures in this survey have been quite resilient. The component ‘whether now is a good time to buy a major household item’ is only down 5.6 per cent over the last two months and in this survey other ‘time to buy’ questions posted partial rebounds,” he said.