Australian consumer confidence fell sharply in December, reversing November’s brief improvement. The Westpac Consumer Sentiment Index dropped -9.0% mom to 94.5, slipping back toward levels seen prior to last month’s surprise bounce. The pullback leaves sentiment only in “cautiously pessimistic” territory as the year comes to a close.
Westpac noted that while confidence has improved meaningfully from the deep and prolonged pessimism that dominated much of 2024, households remain reluctant to shift into outright optimism. The November rebound marked the first net positive reading since the economy reopened after the pandemic, but the latest data suggests that underlying confidence remains fragile and easily unsettled.
The survey reinforces a cautious backdrop for the RBA ahead of its February 2–3 meeting. While inflation has picked up recently, there are few signs that tight labor markets or strong consumer demand are driving the move. Instead, administered prices outside the reach of monetary policy have been a key factor. As those pressures fade, inflation is expected to resume its path toward the midpoint of the target range, though policymakers have warned that if normalization proves slow, rates may need to stay on hold for longer, with hikes still a live contingency.
