Aust consumers’ sentiment falls: Survey

SYDNEY: The risk of further interest rate rises, a sliding stock market and concerns about the global economy dampened consumer sentiment this month in Australia, a survey said yesterday.
The Westpac-Melbourne Institute index found consumer confidence fell 8.3% in January to 103.1 points from 112.5 in December, Westpac Banking Corp said.
Westpac chief economist Bill Evans said Australians were concerned about the central bank hiking its official cash rate again, a move which would almost certainly result in higher mortgage payments for home owners.
Australia’s central bank lifted its cash target rate by a quarter of a percentage point last November to an 11-year high of 6.75% after raising the rate by quarter of a percentage point in August.
Major banks had already lifted interest rates for home loans but fourth-quarter consumer price inflation data due for release on Jan 23 was expected to provide the Reserve Bank of Australia with further evidence that another rate increase is needed to contain inflationary pressures.
“That’s a very large fall, but it’s fairly typical of the falls that we see when consumers experience interest rate increases,” Evans told national radio.
“We’ve seen that in the month of January, with the banks raising their existing variable mortgage rates.”
The survey said confidence was also affected by the deteriorating outlook for the global economy and the slide on the Australian share market which has dropped some 10% since last month and was now about 17% below the peak it set in May 2007. – AAP