Sentiment hit again by fuel and interest rate rises
- Westpac–Melbourne Institute Consumer Sentiment Index drops 4.7% to 80.4.
- Responses over survey week show very sharp pull-back after RBA rate hike.
- Finances back under intense pressure from higher fuel and interest rates.
- Over 80% consumers expect mortgage rates to rise over the next year.
- Homebuyer sentiment and house price expectations tick up but still uncertain.
- Consumers reporting growing unease about the outlook for jobs.
“The Westpac–Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4 in October from 84.4 in September.”
“Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight. At just over 80, the latest sentiment Index is amongst the forty worst reads since our monthly survey began in the early 1970s. We have had two others in this unfortunate group already this year – in April and June – with another eight recorded in 2022–23. Altogether this marks the worst period of recurring extremely weak sentiment since the disastrous recession in the early 1990s.”
“The survey detail shows consumer concerns are still primarily about the cost-of-living and high interest rates than the more acute job and insolvency problems that arise during a recession. However, these pressures are still both broad and intense. Pessimists outnumber optimists in 102 of the 106 sub-groups we track, and by over 20% in nearly two thirds of these. This speaks to the pervasive influence of higher fuel costs in particular.”
“The latest RBA move looks to have badly rattled consumers. Responses over the course of the survey week show a very sharp deterioration after the decision was announced. Sentiment amongst the 60% of the sample surveyed prior came in at 86.9, up slightly from the September read. The sentiment read across the 40% surveyed after the RBA decision came in at just 67.2, an alarmingly weak read that, for complete surveys, has only been registered during the depths of the early 1990s recession. The nearly 20% drop between pre and post RBA samples is also the largest seen since we started tracking daily responses in 2019.”
“Consumers are on high alert for more interest rate increases. The Westpac–Melbourne Institute Mortgage Rate Expectations Index, which tracks consumer interest rate expectations, rose 5.5% to 179.7 in October, just shy of May’s cycle peak of 181. Amongst those surveyed after the RBA decision, just over 80%, an overwhelming majority, expect mortgage rates to increase further over the next 12 months. This compares to 63% last month. Across the mortgage belt, the share is closer to 90%, with over 40% of this subgroup expecting rates to rise by more than a percentage point over the next twelve months.”
“Job-loss fears are slowly rising as well. The Westpac–Melbourne Institute Unemployment Expectations Index ticked 1.9% higher to 142.1 in October, a further slight deterioration. The Index is now clearly above the long-run average of 129 but is still some way below previous peaks, the latest read broadly consistent with a consumer that is ‘on edge’ rather than alarmed. Job loss fears remain more elevated amongst consumers working in cyclical and fuel-cost-exposed sectors like construction, hospitality, food services and transport.”
“Housing-related sentiment provided an interesting contrast in October with both assessments of ‘time to buy a dwelling’ and house price expectations posting small gains in the month.”
Next release: 11 am (AEDT), on Tuesday 10 November 2026
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