Australian Consumer Sentiment Rises to 91.6 in March
Australian consumer sentiment rose 1.2% to 91.6 in March as early gains were offset by Middle East conflict. Inflation expectations jumped to 6.1% recently.
Consumer sentiment in Australia experienced a modest recovery in early March, ending a three-month period of decline. However, the broader economic mood remains cautious as geopolitical instability begins to weigh on household expectations. According to the latest survey from WESTPAC BANKING CORP and the Melbourne Institute, the headline sentiment index rose 1.2% to 91.6. Despite this slight gain, the index remains below the 100-point neutral mark, indicating that pessimists continue to outnumber optimists across the country.
The survey, conducted between March 2 and March 6, revealed a deteriorating outlook as the week progressed. This shift coincided with the escalation of conflict involving the United States, Israel, and Iran. Matthew Hassan, Westpac’s head of Australian macro-forecasting, noted that the sentiment levels recorded in the final days of polling were significantly lower than the initial readings.
"Responses from those surveyed in the last three days were consistent with an index read of just 84."
Simultaneously, a separate report from ANZ highlighted a sharp decline in consumer confidence, driven primarily by rising fuel costs linked to the Middle East conflict. Inflation expectations surged by 0.8 percentage points to reach 6.1%, the highest weekly increase since the data series began in 2010. These persistent inflationary pressures had previously prompted the Reserve Bank of Australia to raise the cash rate to 3.85% in February, with officials warning that further tightening may be necessary if price growth does not stabilize.
While the long-term economic outlook remained largely flat, some internal metrics showed resilience. The Westpac measure of family finances compared to a year ago rose by 1.8%, recovering from a significant drop in the prior month. Furthermore, the sub-index assessing whether it is an appropriate time to buy major household items jumped 4.9%, reversing much of the decline triggered by the February interest rate hike.
