“The decline comes as a reality check after a modest pick-up in the index in recent months had offered glimmers of hope that cost of living pressures might be starting to ease,” Hassan said.
However, the latest Westpac Melbourne Institute consumer sentiment index indicated a decrease to 84.4 in March from 86 in February, underscoring a persistent pessimism among consumers.
The survey highlighted specific anxieties, with the sub-index for economic conditions in the next 12 months dropping by 4.5%.
“Growth in the December quarter of last year was a sluggish 0.2%... which may have played a part in the weakness we saw in that sub-index,” Hassan said.
Furthermore, inflation continues to dominate consumer concerns, despite a slight reduction in the intensity of negativity surrounding the issue.
While some areas of the survey showed modest improvements, such as a slight uptick in the sentiment towards buying a dwelling, the overall outlook remains cautious. The survey before and after the Reserve Bank’s decision to hold the cash rate revealed a significant impact on consumer sentiment.
“The index reading among those surveyed prior to the Reserve Bank’s March rate decision came in at 94.9, dropping sharply to 79.3 among those questioned after,” Hassan said.
Despite the overarching gloom, Hassan noted some optimism in specific demographics, such as investment property owners and residents of Western Australia. However, older age groups and Gen-Xers appear less hopeful, likely reflecting concerns over housing affordability and debt.
“Overall, the slight dip in the headline index for March shows that it’s slow going for the consumer as they continue to await an all-clear signal from the RBA on interest rates,” Hassan said.
For a comprehensive analysis, WestpacIQ offers Hassan's full report.
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