Consumer confidence in Australia declined in January, according to a survey by Westpac released on Tuesday, though improvements are anticipated in the coming months.
The Westpac-Melbourne Institute Consumer Sentiment Index fell by 0.7%, dropping from 92.8 in December to 92.1 in January. Of the five components of consumer confidence evaluated, those measuring current conditions saw a decrease, while future-oriented indicators remained stable or improved in January.
Evaluations of personal finances compared to the previous year showed a decline, reversing gains seen in December by falling 7.8% to 77.7.
Indicators focusing on the future were steadier. Notably, the index measuring whether it is a good time to purchase major household items experienced the most significant growth, increasing by 1.8% to reach 90.8.
Sentiments regarding the economic outlook in five years showed slight improvement, rising 0.7% to 96.6. The measure for 'family finances over the next 12 months' increased by 1.1% to 104.4, while the perspective on economic conditions for the upcoming year held steady at 91.2.
The index assessing the suitability of purchasing a home improved across all states and regions, with a rise of 10.2% to 89.9.
The Westpac-Melbourne Institute Mortgage Rate Expectations Index, which monitors consumer predictions for variable mortgage rates over the next year, slightly decreased to 105.7 from 105.8 in December.
Additionally, consumers are revising downward their expectations for house prices. Nationally, the Westpac-Melbourne Institute Index of House Price Expectations dropped 5.9% to 134 in January, over 15% lower than last year's figure and slightly below the long-term average.
The survey further highlighted a deterioration in unemployment expectations, with the Westpac-Melbourne Institute Unemployment Expectations Index increasing by 2.8% to 127.2.
"The mood among consumers has turned pessimistic for two consecutive months," commented Westpac Group Chief Economist Luci Ellis. "However, consumers remain hopeful of future improvements," she added.
Westpac anticipates that the Reserve Bank will maintain interest rates at the February meeting, with a potential easing expected to begin in May.
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