Australia's Consumer Sentiment Crunched in September

By James Glynn

SYDNEY--Australia's consumer sentiment fell sharply in September as declining home prices, oil-price shocks and the prospect of higher interest rates weighed on the outlook.

The Westpac-Melbourne Institute consumer sentiment index dropped 5.2% to 84.4.

Nearly two-thirds of consumers said they now expect mortgage interest rates to rise, according to data released Tuesday.

Unease about employment security, especially in the construction and hospitality sectors, also contributed to the drop.

Recent weeks have seen concerns about the war in the Middle East ratchet higher, while strong economic data have prompted some economists to call for two more interest-rate increases before the end of the year.

Home prices have also been falling amid forecasts that the retreat could be among the largest on record.

"The fall takes sentiment back towards the deeply pessimistic levels seen earlier in the year," said Matthew Hassan, Westpac's head of Australian macro-forecasting.

Both fuel prices and interest rates again look to be driving the move, he added.

Fuel prices have lifted back above 2 Australian dollars a liter for the first time since April, reflecting higher global energy prices and the expiration of temporary government fuel tax relief, he said.

The consumer sentiment reading is a composite measure based on sub-indexes tracking metrics such as assessments of family finances, expectations for household finances and the economy over the next year, and expectations for the economy over the next five years.

The sub-index tracking consumer assessments of family finances compared with a year earlier dropped 9.2% over the month.

Confidence among homeowners--both with and without a mortgage--fell 13% in the month, the data showed.

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

(END) Dow Jones Newswires

September 07, 2026 21:09 ET (01:09 GMT)