Consumer sentiment has fallen in June to the lowest point in two years, on concerns over interest rates and economic conditions.
The Westpac-Melbourne Institute Consumer Sentiment Index fell 2.6% in June to 101.2. Westpac chief economist Bill Evans said this is the lowest the index has been since June 2009, when the economic crisis was weighing heavily on Australians' minds.
Evans noted that while consumers were more confident in the Australian economy than they were during the 2009 slump, they are more concerned about their personal finances.
“The explanation for why the Index continues to print such soft results must lie in those factors which are so depressing respondents’ assessments of their own financial position,” he said.
While the RBA had toned down the “usually hawkish” rhetoric in its latest cash rate assessment, consumers are still expecting rates to rise in the next 12 months, Evans said.
Curiously, respondents also named tax as one of the main factors impeding confidence. “It is unusual for tax to register such interest,” Evans said.
“There have really only been three periods over the last 10 years when tax has been a significant issue for respondents, [the others being] the period of the GST introduction and last year's focus on the mining tax.”
Lower wage earners have less confidence than higher paid workers, with the confidence of those earning under $40,000 a year down by around 8%.