Australians remain pessimistic about their economic outlook despite the best inflation figures in years and the likelihood of an interest rate cut in less than a week.
New data from Westpac released yesterday showed the bank's consumer confidence index at 92 – a slight improvement from last month but still in negative territory (under 100), where it has sat for more than three years.
"Sentiment has trended up throughout 2024 as most consumers benefited from a still resilient labour market and falling inflation rates," AMP economist My Bui said.
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"However, the progress has been stalled somewhat recently, with sentiment at the same level as the beginning of the year."
It comes after ABS data last week showed living costs are rising at a level beyond inflation.
While core inflation slowed to 2.9 per cent in the March quarter and the headline consumer price index was at 2.4 per cent, the ABS found households' living costs had increased by more, rising by up to 3.5 per cent over the last 12 months.
Only self-funded retirees have seen their costs rise largely in line with inflation, with health, energy, housing and insurance proving a significant burden for most Australians.
"Higher mortgage interest charges, insurance premiums, and food prices over the year contributed to rises in annual living costs across all household types," ABS acting head of prices statistics Neel Tikaram said.
"The rise in mortgage interest charges was driven by higher mortgage debt levels and the continued rollover of expired fixed-rate mortgages to higher variable-rate mortgages," he added.
"The effect of the Reserve Bank of Australia's cash rate cut in February 2025 will be seen in the June 2025 quarter due to the timing of the change in the cash rate."
More relief could be on the way soon, though, with the RBA largely expected to move to cut interest rates for the second time this year next week.
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Markets are pricing in a roughly even-money chance of a rare double cut, which would see the official cash rate dropped from its current 4.10 per cent to 3.60.
Bui said the consumer confidence figures only added to the case for the Reserve Bank to ease interest rates.
"Leading consumer and business confidence readings are still fragile, signalling a challenging landscape for GDP recovery this year," she said.
"In addition to threats from a global trade slowdown, today's data adds to the argument that the RBA needs to cut rates further this year.
"We continue to see at least two more 25bps cuts, one in May and one in August."
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