Consumer sentiment sinks back to six-month low
- Westpac Consumer Sentiment Index declines 3.5% to 92.1 in October.
- Optimism about outlook for family finances fades.
- Consumers less certain about direction of interest rates.
- Unemployment expectations hold firm around average levels.
- House price expectations hit new 15-year high.
“The Westpac–Melbourne Institute Consumer Sentiment Index declined 3.5% to 92.1 in October from 95.4 in September.”
“Consumer confidence has fallen 6.5% over the last two months, giving back all of the gains seen between May and August when rate cuts were giving a clear boost. At 92.1, the October Index read is now at firmly pessimistic levels, albeit still well above the very weak reads seen during the extended ‘cost-of-living’ crisis.”
“Consumers appear to have been rattled by recent updates on inflation. ‘Partial’ measures released over the last month suggest annual inflation has lifted back towards the top of the RBA’s 2–3% target range. This news, and signs of firmer consumer demand and a pick-up in housing markets, looks to have sparked renewed doubts about the path of interest rates, weighing on near-term expectations for family finances and the economy.”
“Interestingly, responses over the course of the survey week show the RBA’s decision to leave rates on hold at its September meeting went some way towards calming these fears. Sentiment was 2–3pts lower amongst those surveyed prior to the RBA decision with this sub-group clearly bracing for a more hawkish decision. Just over half expected mortgage interest rates to rise over the next 12 months, compared to about a third of respondents surveyed after the announcement.”
“For the survey as a whole, the component detail showed the latest weakening centred on more downbeat views on the near-term outlook, especially prospects for family finances... Assessments of family finances recorded the biggest falls. Forward views saw a particularly marked deterioration, with the ‘family finances, next 12 months’ sub-index down nearly 10% to 97.1. This is the weakest read in just over a year and only the second ‘net pessimistic’ sub-100 read since November. Current assessments were also downgraded, suggesting some of the support coming from policy – both this year’s interest rate cuts and last year’s tax cuts – may be starting to wane. The ‘family finances vs a year ago’ sub-index was down 4.8% to 82.1, unwinding just over half of the gain over the previous two months.”
“While sentiment has been shakier, consumers are still not concerned about the outlook for jobs. The Westpac–Melbourne Institute Unemployment Expectations Index declined 2.9% to 127.6 in October. That takes the index slightly below its long-run average but still broadly consistent with a stable labour market.”
“Homebuyer sentiment was largely unchanged in October, with the ‘time to buy a dwelling’ index up only slightly by 0.4% to 96.5.”
“In contrast, the bullish consensus on house price expectations has continued to strengthen. The Westpac–Melbourne Institute Index of House Price Expectations rose another 2.1% in October, hitting a fresh fifteen-year high of 171.9. Just over three-quarters of consumers expect prices to rise over the next 12 months. Expectations are stronger still in Queensland (184) but lagging a touch in Victoria (165) and Western Australia (166).”
The Westpac–Melbourne Institute Consumer Sentiment Index for October 2025 was released at 11 am (AEDT), on Tuesday 7 October 2025. The index for November 2025 will be released at 11 am (AEDT), on Tuesday 11 November 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.