Consumer sentiment nudges ahead
- Westpac Consumer Sentiment Index nudges up 0.5% to 92.6 in June.
- Lower inflation and interest rate cuts are clear positives.
- But slow growth and trade disputes abroad weighing on the consumer mood.
- Promising lift in buying intentions as cost-of-living squeeze eases.
- Risk aversion intensifies despite positive expectations for house price
“The Westpac–Melbourne Institute Consumer Sentiment Index nudged 0.5% higher to 92.6 in June from 92.1 in May.”
“The overall mood remains broadly unchanged with consumers stuck in a holding pattern of ‘cautious pessimism’. The detail shows two clear opposing forces at work. On the positive side, the RBA’s May interest rate cut and moderating inflation are providing significant boosts, particularly around buyer attitudes towards major purchases. But against this, more sluggish growth reads domestically and the unsettled situation around global trade are continuing to weigh heavily on expectations.”
“This month’s survey included additional questions on news recall, which are run once a quarter. Responses in June highlight the opposing forces influencing sentiment. Topic-wise, ‘inflation’ remains the dominant news with the highest level of recall. Consumers view the news as gradually improving with 63% assessing it as unfavourable in June compared to 65% in March, 76% in December, 77% in September and 80% back in June last year. The news on other high-recall domestic topics – ‘economic conditions’, ‘employment’ and ‘interest rates’ – was also assessed less negatively than in March… News on ‘international conditions’ is becoming more prominent and is seen as a very clear negative. News recall on this topic has risen to a three-year high with 77% of consumers assessing the news as unfavourable – easily the most negative of the major news topics.”
“There were similar themes evident in the component detail… Whereas components linked to the inflation and interest rate situation showed some improvement, the forward-looking components, which are likely to be more sensitive to the threats from abroad, deteriorated.”
“The Westpac–Melbourne Institute Mortgage Rate Expectations Index, which tracks consumer expectations for variable mortgage rates over the next 12 months, fell 6.8% to 84.6, a thirteen-year low. The detailed responses show that, amongst those with a view, over two thirds expect mortgage rates to be the same or lower in a year’s time. That’s closer to 80% amongst consumers with a mortgage.”
“Consumers are less confident about jobs. The Westpac–Melbourne Institute Unemployment Expectations Index rose 5% to 127.4 in June (recall that higher index reads mean more consumers expect unemployment to rise over the year ahead). The Index is still relatively positive but now only slightly better than the long-run average read of 129.”
“The RBA’s May interest rate cut and the more positive tone of the RBA’s language generated a positive shift in housing-related sentiment…. The ‘time to buy a dwelling’ index rose 3.6% to 93.3. While that marks the strongest read since September 2021, pessimists still outnumber optimists with homebuyer sentiment still a long way below the historical average of 120… The Westpac–Melbourne Institute Index of House Price Expectations surged 7% to 166.5. This takes the index slightly above previous cycle peaks to the highest level since 2013.”
The Westpac–Melbourne Institute Consumer Sentiment Index for June 2025 was released at 11 am (AEDT), on Tuesday 10 June 2025. The index for June 2025 will be released at 11 am (AEDT), on Tuesday 15 July 2025.
The Westpac–Melbourne Institute Survey of Consumer Sentiment Index measures changes in the level of consumer confidence in economic activity. Further information can be found here.