Consumer sentiment slips back to ‘cautiously pessimistic’
- Westpac Consumer Sentiment Index declines 3.1% to 95.4 in September.
- Finances continue to improve but renewed concern about economic outlook.
- Consumers a little less confident about further rate cuts.
- Unemployment expectations back around long run averages.
- Risk aversion eases a little but still elevated.
- House price expectations hit 15-year high.
"The Westpac–Melbourne Institute Consumer Sentiment Index declined 3.1% to 95.4 in September from 98.5 in August.”
“The sentiment recovery that first gained momentum about a year ago continues to move along in fits and starts. Last month’s positive response to a third 25bp interest rate cut from the RBA has been followed by another partial pull-back. At 95.4, the latest Index read is still 2.5% above its July level and 5.9% above the low seen following the tariff-related turmoil in April but firmly back in ‘cautiously pessimistic’ territory overall.”
“Outright optimism remains elusive for Australian consumers. The cost-of-living crisis may be largely over and policy easing generating some uplift but there is still clearly some unease about the path ahead.”
“Responses to additional questions on news recall, run once a quarter, suggest consumers view the news-flow in recent months as mixed rather than negative. Topic-wise, ‘inflation’ news has become less dominant – recall levels dropping to a four-year low. However, inflation news was assessed as less favourable in September than in June, likely reflecting the latest upside surprise on the monthly CPI indicator.”
“Overall, the sentiment mix and responses to questions on news recall suggest the upside result on inflation rather than news on the economy per se may be the underlying source of renewed concerns about the economic outlook.”
“This may also explain why consumers are a little less confident about the prospect of further interest rate declines. The Westpac–Melbourne Institute Mortgage Rate Expectations Index, which tracks consumer expectations for variable mortgage rates over the next 12 months, rose 5.2% to 88. That is coming off what was a thirteen-year low back in July. Most consumers, 69% of those with a view, expect mortgage rates to be the same or lower in a year’s time. However, that is off a touch from 72% amongst those surveyed following last month’s rate cut.”
“Renewed concerns about the economy also look to have eaten away at confidence around jobs. The Westpac–Melbourne Institute Unemployment Expectations Index rose 4.6% to 131.4 in September. That brings the index in line with its long run average, consistent with a stable rather than improving labour market.”
“Housing-related sentiment was relatively unchanged in September… Homebuyer sentiment dipped slightly, the ‘time to buy a dwelling’ index down 1.7% to 96.1… In contrast, consumer house price expectations continue to ride high. The Westpac–Melbourne Institute Index of House Price Expectations rose another 2.6% in September, the 168.4 read marking a fifteen year high. Over three quarters of consumers now expect prices to rise over the next 12 months.”
The Westpac–Melbourne Institute Consumer Sentiment Index for September 2025 was released at 11 am (AEDT), on Tuesday 9 September 2025. The index for October 2025 will be released at 11 am (AEDT), on Tuesday 7 October 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.