Consumer Sentiment Index

IBISWorld forecasts consumer sentiment to average 88.8 index points in 2024-25, representing an uptick of 6.7 index points over the previous year. Under the Budget 2024-25, the Australian Government is delivering cost of living relief for Australians through energy price relief, lower out-of-pocket health costs, rental assistance and tax cuts, all facilitating the rise in sentiment. Even so, consumer sentiment has remained below 100 because of a myriad of factors, including supply chain constraints, labour shortages, rising cost of living and, in particular, elevated mortgage interest rates. The RBA has implemented a series of cash rate increases from May 2022 to counter inflationary pressures, with the most recent hike in November 2023. Even so, the cash rate has remained stable since then, with the cash rate expected to drop over the year, a trend that will likely support an improvement in consumer sentiment.

Economic conditions have affected consumer sentiment over the past five years. The rise in healthcare and utility costs has curtailed consumer spending power. Even though real GDP has experienced growth, it has been dominated by the upsurge in business profitability, increased government spending and robust export figures for commodities. Even so, households have not enjoyed similar conditions, remaining more restrained over this duration. The COVID-19 pandemic has, in some instances, negatively influenced consumer sentiment. Sentiment dipped sharply in 2019-20 because economic uncertainty and border closures hampered business activity. During the pandemic, those unable to earn income could apply for a lump sum from the COVID-19 Disaster Payment subsidy, which was critical in supporting affected households. The relief provided stimulated a resurgence in consumer sentiment growth in 2020-21.