SYDNEY, May 16 (Reuters) - A measure of Australian
consumer sentiment fell in May after a surprise hike in
interest rates by the Reserve Bank of Australia (RBA) and a
"mildly disappointing" federal budget clouded the outlook for
family finances and the economy.
The Westpac-Melbourne Institute index of consumer sentiment
out on Tuesday slid 7.9% in May from April, with the index
falling to just above the levels seen in March, which recorded
the lowest monthly reading since the COVID-19 outbreak in 2020.
"The two key developments over the last month have been the
surprise decision by the Reserve Bank Board to lift the cash
rate by a further 0.25% in May and the Federal Budget," Westpac
chief economist Bill Evans said.
The index reading of 79.0 for May meant pessimists
outnumbered optimists.
The RBA earlier this month stunned markets with a rate rise
rather than an extended pause as was widely expected by traders,
saying inflation - sitting at near 30-year highs of 7.0% - was
way too high and even higher rates might be needed to bring it
to heel.
Australia's Labor government last week boasted the first
budget surplus in 15 years, as strong jobs growth and bumper
mining profits swelled its coffers, but it also announced
billions in cost-of-living relief.
"Some consumers may also have had unrealistic expectations
going into Budget 2023 – especially around the scope to deliver
cost-of-living relief without adding to the task of reining in
high inflation," Evans said.
Stubborn inflation and higher energy prices meant consumers
were holding off on buying a major household item, with the
index dipping 0.4%.
Confidence in the outlook for house prices has surged, with
the index up by 10.7%, hitting the highest level since February
2022, while about 70% of consumers expect mortgage rates to rise
over the next 12 months.
(Reporting by Renju Jose in Sydney;
Editing by Shri Navaratnam)
Messaging: @renjujose))
