The Westpac Melbourne Institute of Consumer Sentiment has today revealed a further drop on sentiment leading up to the federal budget, a result that Westpac Chief Economist Bill Evans attributes to the rise in petrol prices.
Consumer sentiment dropped by 3.2 per cent during April, hitting 96.2 per cent from the 99.5 registered in March.
“This is a disappointing result. We would have preferred to have seen some upward momentum in the index going into the important Commonwealth Budget that will be released next month,” Mr Evans said.
“Recall that at this time last year the Index registered 99.7 but tumbled by 6.8 per cent to 92.9 in the aftermath of the 2014–15 Budget.”
Mr Evans attributed the poor result to the imminent Budget and highlighted the $0.24 per litre rise in petrol from February to April. The Confidence Index rose by 8 per cent in February, when the price of petrol dropped to $1.10 from $1.32 in November.
Australian National Retailers’ Association (ANRA) CEO Anna McPhee said next month’s Budget must be able to create a sustainable path without creating “a short-term shock” on households and spending.
“The continued weakening of consumer sentiment this month reveals households are feeling less confident about the economy and their own prospects, and less confident than they were this time last year,” Ms McPhee said.
“The sharp rise in unemployment expectations (up 8.5%), coupled with a decrease in the economic outlook from households are dampening confidence and is a concern for the retail sector.
“March and April’s declining consumer sentiment index suggest more needs to be done to support household confidence in order to stimulate further improvements in the domestic economy.”