No big purchases on the cards as consumer pain lingers

Consumer sentiment has been tracking at low levels for two years and is showing few signs of material improvement.

Consumer sentiment has been tracking at low levels for two years and is showing few signs of material improvement. Photo: Getty

Consumers remain wary about big ticket purchases as financial pressures refuse to let up.

Another slide in sentiment in April showed consumers are feeling less upbeat about spending on big household items amid growing pessimism about the state of the economy.

The Westpac and Melbourne Institute survey recorded a 6.6 per cent decline in the component questioning consumers on their intent to spend on something major.

Overall, the index was down 2.4 per cent over the month, falling to 82.4 and well below the neutral level of 100.

Westpac senior economist Matthew Hassan said the sharp drop in already-weak buyer sentiment was the most unsettling detail in the April survey.

He said the component typically reflected the full impact of cost-of-living pressures on purchasing power, with the latest deterioration potentially a sign of reviving price pressures.

The index also recorded a 4.4 per cent fall in the indicator tracking expectations of the long term economic conditions and a 2.7 per cent decline in attitudes towards the economy over the next 12 months.

Working in the other direction was a slight improvement in the outlook on current and future family finances, although these indicators were still deep in negative territory compared to historical standards.

“The pessimism that has dominated the consumer mood for nearly two years now is still showing few signs of lifting,” Mr Hassan said.

The long stint of sour consumer sentiment reflected the nature of the latest economic crisis, with high inflation limiting the ability of central banks and governments to provide stimulus and support, he said.

“In contrast, previous sentiment slumps have typically come from shocks to growth that did not have this inflation dimension,” he explained.


Topics: Consumer
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