Australia consumer sentiment rises 1.2% in March to 91.6

Consumer sentiment in Australia showed a modest improvement in March 2026, with the Westpac–Melbourne Institute Consumer Sentiment Index rising 1.2 per cent to 91.6 from 90.5 in February. The increase points to a slight improvement in confidence, although overall sentiment remains firmly in pessimistic territory.

The latest reading indicates some resilience among consumers despite ongoing uncertainty, said Matthew Hassan, Westpac’s head of Australian macro-forecasting  adding, “While consumers remain firmly pessimistic, sentiment continues to show some resilience.” The relatively muted reaction to the Reserve Bank of Australia’s 25-basis-point rate hike in February helped sentiment edge slightly higher, he noted.

Australia’s consumer sentiment rose 1.2 per cent to 91.6 in March 2026, signalling modest improvement but continued pessimism.
It showed resilience despite the February rate hike, though concerns grew during the survey week amid Middle East tensions.
While perceptions of current finances and spending improved, expectations for the near-term economy and labour market weakened.

However, responses collected during the survey week indicate that sentiment weakened as the week progressed. According to Hassan, daily responses suggested growing unease linked to escalating tensions in the Middle East, with responses from the final three days of the survey consistent with a significantly lower index reading of around 84, Westpac Institutional Bank said in a press release.

The detailed components of the survey revealed a mixed picture. Assessments of current financial conditions and attitudes towards major purchases improved compared with February, indicating slightly better perceptions of present circumstances. At the same time, expectations for the broader economy over the next year deteriorated, highlighting concerns about near-term economic prospects.

Consumers, however, appeared more optimistic about the longer-term outlook. The sub-index measuring expectations for the economy over the next five years improved modestly and remained above its historical average. In contrast, the measure tracking expectations for the economy over the next 12 months declined, reaching its lowest level since September 2024.

Interest rate expectations continue to shape consumer sentiment. The Westpac-Melbourne Institute Mortgage Rate Expectations Index fell 3.9 per cent in March, reversing part of the sharp increase seen in February. Despite this easing, a strong majority of consumers still expect mortgage rates to rise further over the coming year.

Global developments are also influencing sentiment. The survey showed a sharp increase in consumer recall of international news, particularly related to the escalating Middle East conflict. Nearly 90 per cent of respondents who recalled such news assessed it as unfavourable, reflecting heightened concern about global instability and its potential economic impact.

Labour market expectations weakened as well. The Westpac-Melbourne Institute Unemployment Expectations Index rose 3.8 per cent to 134.7, indicating that more consumers expect unemployment to increase in the year ahead. The rise was especially pronounced among respondents aged over 45, while younger consumers reported slightly improved expectations.

Fibre2Fashion News Desk (SG)