The Westpac Melbourne Institute Consumer Sentiment Index increased 9.4% in April with the recovery most likely by the Reserve Bank decision to halt cash rate increases.
Consumer confidence is now at its highest level since June 2022 although still 10.4% below April 2022, the month before the RBA Board began raising the cash rate, Westpac chief economist Bill Evans said.
“Despite this lift in April, we still characterise consumer sentiment as weak and considerable apprehension around interest rates on the part of consumers remains,” he said.
There were some positive messages from the sub-indexes, particularly around family finances and spending intentions and while the major household purchase index rose 9.5%, Evans said it was “still troubling, being 16.4% below April last year.”
Confidence in the outlook for house prices has boomed, lifting 16.7%, increasing by 43% since its recent low in November last year. Confidence lifted more sharply in NSW (up 16%) than Victoria (up 9.5%) although other states such as Queensland (up 30%) and WA (up 36%) were more upbeat.
According to Evans, with underlying inflation still likely to be in the 6.5%–7.0% range and the unemployment rate holding around 50-year lows the case for extending the inflation pause in May is likely to be challenged.