Consumer confidence hit a new low in November falling 6.9% and is now sitting below the low point of the GFC, according to the Westpac Melbourne Institute Consumer Sentiment Index.
The latest sentiment decline follows ABS figures showing inflation surged from 6.1% in June to 7.3% in September.
Consumers have also been unnerved by forecasts in the government’s October Budget showing electricity prices are expected to increase by 56% over the next two years, Westpac chief economist Bill Evans said. “The Budget looks to have been poorly received in terms of its immediate support for household finances,” he said.
The November sentiment print is particularly important given the lead-in to the Christmas shopping season spending plans with nearly 40% of consumers expecting to spend less on gifts this year.
Confidence in the economy also deteriorated with the ‘economic outlook, next 12 months’ sub-index falling 7% and the ‘economic outlook, next five years’ sub-index down 7.3%.
“Attitudes towards major household purchases continue to show a clear sensitivity to rising prices and interest rates, with the ‘time to buy a major household item’ sub-index declined 4.3%, the weakest monthly read since the GFC,” Evans said.
House price expectations have also caught the wobbles posting a further sharp fall, declining 8%.