Following the RBA’s decision to pause the cash rate at its April meeting, which marked the end of ten consecutive rate hikes, consumer confidence surged, with the Westpac consumer sentiment index reaching its highest level since June 2022.
The index indicated that consumer confidence rose by 9.4% in April to 85.8, with mortgage holders showing a 12.2% increase in confidence since the beginning of the month. However, the April 2023 Consumer Confidence level is still 10.4% lower than the level in April 2022, which was the month preceding the start of the RBA’s year-long rate-hike campaign to control inflation.
The index for economic conditions in the next 12 months increased by 16.5% to 85.4, and the measure for family finances in the upcoming year rose by 12.0% to 95.5. Additionally, confidence in housing prices has seen a significant surge in the past month, with expectations rising by 16.7%.
Bill Evans, the chief economist at Westpac Group, remains cautious despite the surge in consumer sentiment. “While we have seen an increase, we still consider consumer sentiment to be weak, and it aligns with our prediction that consumer spending will remain lacklustre throughout 2023 and at least the first half of 2024,” he commented.
According to the Age newspaper, the probability of another rate hike in May, as indicated by financial markets, is only 4%.
