Australia Consumer Sentiment Weakens Sharply: Westpac

(RTTNews) - Australia's consumer sentiment declined sharply in February to near historic lows seen last year due to the cost of living pressures and interest rate hikes, survey results from Westpac showed on Tuesday.

The Westpac-Melbourne Institute consumer sentiment index fell 6.9 percent to 78.5 in February from 84.3 in January.

There were notable deterioration in views on family finances, the near-term outlook for the economy and whether now is a good time to buy a major household item.

The 'family finances vs a year ago' sub-index dropped percent to just 62.1, which was the weakest reading since the depths of the early-1990s recession.

The 'family finances, next 12 months' sub-index posted a 6.7 percent decline to 86.8 in February. Likewise, the economic outlook next 12 months' sub-index slid 7.7 percent to 75.1 percent.

At the same time, the 'economic outlook, next five years' sub-index declined only 2.8 percent to 90.3.

The 'time to buy a major household item' sub-index plunged 10.1 percent to 78.0 in February.

The Westpac-Melbourne Institute Unemployment Expectations Index jumped 10.6 percent to 119.4 in February.

Around housing, the survey showed that buyer attitudes remained extremely negative. The 'time to buy a dwelling' index fell 5.6 percent to 73.9. The house price expectations index dipped 1.4 percent to 102.9 in February but remained in 'net positive' territory.

Westpac senior economist Matthew Hassan, said the consumer sentiment survey provides a very clear warning that the pressures bearing down on the consumer are becoming intense.

The cooling in inflation and an easing in labor market pressures going forward should set the scene for the Reserve Bank of Australia to end its policy tightening cycle around mid-year, Hassan noted.

The board of the RBA next meets on March 7. The economist expects the Board to raise the cash rate by a further quarter point to 3.60 percent, pausing in April before a final 25 basis points increase in May.