Australia's consumer confidence weakened notably in May to the lowest level since the pandemic outbreak in 2020 as consumers expressed deep pessimism after a surprise rate hike from the Reserve Bank and a mildly disappointing budget, survey results from Westpac showed on Tuesday.
The Westpac Melbourne Institute Index of Consumer Sentiment fell 7.9 percent to 79.0 in May from 78.5 in April.
Further, this was the lowest monthly reading since the pandemic outbreak in 2020.
The survey of 1200 respondents was conducted over four days from May 8 to 11.
The two key developments over the last month have been the surprise decision by the Reserve Bank of Australia Board to lift the cash rate by a further 0.25 percent in May and the Federal Budget, Westpac said.
A high inflation rate and a sharp rise in interest rates have clearly impacted household disposable incomes, resulting in entrenched pessimism, the survey said.
On the other hand, the survey continued to show resilience to labor market conditions and signs of renewed confidence in the housing market.
Among sub-components, consumers' opinion regarding the economy's outlook for the next 12 months worsened in May, with the sub-index falling to 77.3 from 85.4 in April, and that for their own financial conditions fell from 95.5 to 85.8.
The confidence in the outlook for house prices increased markedly in April, as the respective index came in at 144.3 versus 130.3 a month ago.
