Australian consumer confidence flatlines despite slowing inflation and rate cut speculation
SYDNEY (Reuters) - Australian consumer sentiment remained subdued in February, a survey showed on Tuesday, despite slowing inflation and speculation about an imminent cut in interest rates.
The Westpac-Melbourne Institute index of consumer sentiment edged up a mere 0.1% in February from January, when it dipped 0.7%. The index was 7.2% higher on a year earlier, but at 92.2, pessimists continue to outnumber optimists.
The cautious outlook suggests that consumers are not rushing to spend and stoke inflation, leaving the door open for the Reserve Bank of Australia (RBA) to ease monetary policy as early as next week.
"The consumer mood improved materially over the second half of 2022, but the recovery has stalled in the last three months as continued pressures on family finances and a more unsettled global backdrop weigh against firming expectations of rate cuts domestically," said Matthew Hassan, Westpac's head of Australian macro-forecasting.
Of the respondents, 36% expected mortgage rates to decline over the next year, while 21% saw no change and 28% anticipated a rise in rates. Financial markets are more confident about an easing, with a 95% probability that the RBA will cut its 4.35% cash rate at its meeting on February 18.
The survey revealed that the key pressure point was the assessment of family finances compared to a year ago, which fell 3.4% to 75.1, extending the 7.8% decline in January.
The outlook was slightly brighter, with the index of family finances for the next 12 months rising 0.6% to 105.0, indicating a majority of optimists.
The survey's measure of the economic outlook for the next 12 months firmed 1.9%, while the outlook for the next five years edged up by 0.9%.
The measure of whether it was a good time to buy a major household item rose 0.1%, but remains historically weak at 90.9.