A private reading showed that the sentiment of the Australian consumer still remained sour in February, despite potential interest rate cuts and easing inflation.
The Westpac-Melbourne Institute Consumer Sentiment Index marginally climbed 0.1% to 92.2 from 92.1 in January, according to data the lender published on Tuesday.
Westpac's head of Australian macro-forecasting, Matthew Hassan, said that the index highlights a "cautiously pessimistic" consumer sentiment due to various factors putting pressure on household finances, including a post-Christmas financial "hangover".
However, most consumers are anticipating that their finances will improve over the year and many are also expecting interest rate cuts. About 36% of those surveyed expect a drop in mortgage rates, 28% are seeing higher mortgages and 21% are not seeing any changes at all, Westpac said.
Still, the prospect of rate cuts does not boost morale over the economy amid various global factors, including the result of the US election.
"The consumer mood improved materially over the second half of 2024," Hassan said, "but the recovery has stalled in the last three months as continued pressures on family finances and a more unsettled global backdrop have weighed against firming expectations of rate cuts domestically."
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