Australian consumer confidence turns positive for first time since 2022, Westpac-Melbourne Institute finds

More Australian consumers are upbeat rather than negative about the economy for the first time since Prime Minister Anthony Albanese came to power in 2022 despite a big jump in inflation, a new survey shows. There was very good news in the monthly Westpac-Melbourne Institute sentiment barometer, even after the Reserve Bank of Australia this month left interest rates on hold at 3.6 per cent in response to the consumer price index soaring above its 2 to 3 per cent target because of higher electricity prices. Westpac’s head of Australian macro-forecasting Matthew Hassan said the first positive reading since February 2022, where optimists outnumbered pessimists, was a surprise given the inflation jump and commentary about the RBA being less likely to cut interest rates again soon. “This is an extraordinary and somewhat surprising result,” he said. “The real surprise, though, is how much these positives have outweighed renewed concerns about inflation and the outlook for interest rates.” The result for November, of 103.8 points, was above the 100-level where optimists outnumber pessimists, following a 12.8 per cent jump this month from October’s 92.1-point score. This was also the most positive result in seven years, when the sugar-hit effects of record-low 0.1 per cent RBA interest rates during COVID were excluded. It was also the second biggest monthly gain on record since the series began in 1993, outside of the pandemic and the Global Financial Crisis when government stimulus programs had artificially buoyed consumer spirits during dark times. Consumer sentiment had remained negative in 2025, even as the RBA cut interest rates in February, May and August. Upbeat on economy Mr Hassan said the surprisingly positive reading for November was the result of more people feeling more confident about the Australian economy over the coming 12 months. “Much of the November sentiment gain is coming from a markedly more confident assessment of prospects for the economy,” he said. “Domestically, there are clearer signs that a recovery is gaining momentum, especially around consumer demand and housing markets.” The survey also showed 80 per cent of respondents expected house prices to rise over the coming year. University of Melbourne Associate Professor Viet Nguyen described consumer sentiment on real estate as “very bullish” given the house price expectations score of 172.4 for November, which was well above the 100-level mark separating optimists from pessimists. But AMP economist My Bui said those who owned their home outright were the ones driving the resurgence in consumer sentiment, more than Australians with a mortgage. “Therefore, it is likely that recent strong growth in home prices have fed into the positive outlook,” she said. Big turnaround The Westpac-Melbourne Institute’s monthly survey of 1200 adults had, until November, been in negative territory since Labor won the May 2022 election. It had been consistently negative since Russia’s Ukraine invasion, in late February 2022, pushed up crude oil prices, leading to Australian inflation by late 2022 hitting a 32-year high of 7.8 per cent. Motorists three years ago paid more than $2.20 a litre for unleaded petrol. This led to the RBA raising interest rates 13 times in 2022 and 2023. But astoundingly, the result for November was in positive territory for the first time since early February 2022, even after the Australian Bureau of Statistics revealed inflation in the year to September had soared to 3.2 per cent. The consumer price index had accelerated from 2.1 per cent following the end of Queensland’s $1000 electricity rebate and Western Australia’s equivalent $400 credit. The Federal Government’s $300 annual rebate is continuing until the end of 2025, after being extended by another six months at a cost of $1.8 billion in the pre-election March Budget. The survey was taken from November 3 to 8, which included the RBA’s Melbourne Cup day decision on November 4 to leave the cash rate on hold for the second consecutive meeting. Cost-of-living concerns, however, haven’t completely escaped people’s minds with the measure of family finances comparing now with a year ago in negative territory at 85.2 points. “There are still some soft patches in the consumer sentiment data suite which suggests to us that the strong recovery momentum is likely to be short-lived,” Ms Bui said. “The monthly increase in sentiment has been driven by households’ future outlook. Meanwhile, actual family finances remained negative in the past few months.”