FX.co ★ Australian Consumer Mood Falls on Rate Concerns

Consumer sentiment in Australia has taken a hit, with the Westpac-Melbourne Institute Consumer Sentiment Index falling by 3.1% from the previous month, reaching 95.4 in September 2025. This decline has wiped out August's 5.7% increase, highlighting a renewed apprehension regarding future interest rates despite the easing cost-of-living pressures and some support from looser monetary policy. Economic outlook perceptions have dimmed, with the 12-month forecast dropping by 8.9% to 92.2 and the 5-year projection declining by 5.9% to 92.7. The index tracking the sentiment towards purchasing major household items decreased by 3.4% to 98.2, and expectations for unemployment rose by 4.6%, reaching 131.4, which is above the long-term average of 129. Nonetheless, there has been a modest improvement in family finances; the index for financial conditions compared to the previous year increased by 2.6% to 86.3, while expectations for the coming year rose slightly by 0.9% to 107.7. Mathew Hassan, Head of Australian Macro-Forecasting, noted that consumer recovery since mid-2024 has been languid and further monetary policy easing may be necessary. He anticipates the Reserve Bank of Australia (RBA) will reduce interest rates by 25 basis points in November, with two additional cuts expected in 2026.