Budget tax changes rattle consumer confidence in June: Westpac–Melbourne Institute

The news: Australian consumer sentiment has declined 2.9% to 80.6 in June, down from 83 in the month prior, according to the latest survey from the Westpac–Melbourne Institute.

The context: Westpac head of Australian macro-forecasting Mathew Hassan said consumers remain deeply pessimistic. The sentiment shock that hit in April eased slightly in May but intensified again in June.

Hassan added that the latest monthly index reading is among the weakest seen in the survey’s 50-year history, with pessimists outnumbering optimists by nearly 20%.

While cost-of-living issues remain front and centre, a sharp drop in house price expectations suggested consumers are becoming increasingly unsettled by recently announced capital gains tax and negative gearing changes in the federal budget.