Australian Consumer Confidence Weighed by Rates Doubt

By James Glynn

SYDNEY--Australian consumer confidence is being crushed as hopes for further cuts in mortgage interest rates fade.

The Westpac-Melbourne Institute consumer sentiment index fell 3.5% to 92.1 in October from September.

Consumer confidence has now fallen 6.5% over the last two months, giving back strong gains seen between May and August, when rate cuts were providing a clear boost, the data showed.

The fall in confidence comes after the Reserve Bank of Australia left interest rates on hold at a policy meeting last week and warned that the inflation outlook has become more uncertain.

The drop in confidence is starting to challenge the notion that growth will be lifted over the next year on the back of a resurgence in consumer spending.

Consumers appear to have been rattled by recent updates on inflation, said Matthew Hassan, senior economist at Westpac.

Partial measures of inflation released over the last month suggest annual inflation has risen back toward 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," Hassan added.

Assessments of family finances recorded the biggest falls.

Forward views saw a particularly marked deterioration, with the subindex for family finances over the next 12 months down nearly 10% to 97.1.

This is the weakest reading in just over a year and only the second net pessimistic sub-100 read since November, the data showed.

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

October 06, 2025 20:45 ET (00:45 GMT)