Consumer sentiment worst since early 90s: Westpac

The news: Australian households continue to feel the pressure from high prices and interest rates, with consumer sentiment at its lowest January level since the early 1990s recession, a monthly survey shows.

The numbers: The Westpac Melbourne Institute Consumer Sentiment Index fell 1.3% to 81, which was in the bottom 7% of observations since the survey began in the 1970s. However, interest rate fears eased over the period, with 52% of respondents expecting further mortgage rate hikes in the next year, down from 60% in December's survey.

The context: With no Reserve Bank cash meeting in January, Westpac attributed the easing fears to last week's softer-than-expected inflation result and rising expectations of 2024 rate cuts in the USA. Quarterly CPI figures are due at the end of January and take into account thus-far sticky services inflation, which has been a source of concern with the RBA.

What they said: "The continued weak reads on sentiment show Australian consumers remain under intense pressure as the surging cost of living, materially higher interest rates and rising tax take weigh heavily on incomes," Westpac senior economist Matthew Hassan said in a statement.