Australian households are the most persistently pessimistic they have been since the early-1990s recession, after a fourth Reserve Bank rate rise.
Following the RBA's decision to lift interest rates to the highest level since 2011, confidence among Australian consumers plunged about 20 per cent, according to the Westpac–Melbourne Institute consumer sentiment index on Tuesday.
The overall survey, conducted between September 28 and October 1, showed the index dropped by 4.7 per cent to 80.4 in October - the worst level since the outbreak of the Middle East conflict in early April.
But for respondents surveyed after the RBA call on September 29, the index dropped to 67.2 - the lowest level since the late 1990s.
That was broadly in line with the weekly ANZ-Roy Morgan consumer survey, which fell about five per cent to 67.1 points.
Sentiment has been extremely weak for the longest period since the "disastrous" recession of the early 1990s, Westpac’s head of Australian macro-forecasting, Matthew Hassan, said.
"Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight," Mr Hassan said.
“The latest RBA move looks to have badly rattled consumers. Responses over the course of the survey week show a very sharp deterioration after the decision was announced."
Assessments of family finances and buyer sentiment were the biggest categories impacted.
Expectations about the economic outlook fell less sharply, but assessments about the economy in the next five years were back to lows not seen since August 2020, shortly following Melbourne's second lockdown and before JobKeeper subsidies were expanded.
AMP economist My Bui said the the decline was unsurprising following the September rate hike and amid rising fuel prices.
"On our calculation the weekly petrol bill for a typical Australian household has gone up by $20 versus the beginning of the year," she said.
"The worry with declining confidence is that it tends to correlate with household spending on a per capita basis: the downtrend in confidence over the past twelve months suggests consumption per person will likely fall further into contraction this year."
Given rising borrowing costs, mortgage holders were the most pessimistic home ownership sub-group, at 77 index points.
Those who own their home outright experienced the largest decline in sentiment in the month, as the housing market downturn extended for a sixth month.
Renters were the most optimistic, unchanged at 84.8 points.
Fears of job losses are rising as well, with unemployment expectations ticking up 1.9 per cent higher, Mr Hassan said.
But there are still signs the labour market is holding strong.
"The one positive for households is that job vacancies have increased to a two year high of 122 points, which accords with business sentiment expectations of positive employment growth," said Citi analysts Josh Williamson and Faraz Syed.
