Australia Consumer Sentiment Surges to 3-1/2-Year High

Australia’s Westpac-Melbourne Institute Consumer Sentiment Index surged 5.7% in August 2025 to 98.5, the highest since February 2022, after a 0.6% rise in July. Sentiment was buoyed by the Reserve Bank’s 75bps rate cuts since January and a more optimistic policy tone. All components rose: family finances compared to a year ago rose 6.2% to 84.2, despite being below the long-run average of 88, while expectations for the next 12 months climbed 5.4% to 106.8. Views on the economy improved, with the 12-month outlook up 7.6% to 101.2 and the 5-year outlook rising 5.4% to 98.4, both above historical norms. The time to buy a major household item index gained 4.2% to 101.7, while unemployment expectations fell 2.4% to 125.6, still below the long-run level of 129. Mathew Hassan, Head of Australian Macro-Forecasting, said the long spell of consumer pessimism may be ending, though sustaining momentum could require more easing. But he noted policymakers face no urgent pressure for further cuts.