texasholdemzynga| Australia's consumer confidence fell in May! Concerns about inflation remain, or stimulate another interest rate hike

Huitong Financial APP--Consumer confidence in Australia fell in May as households expressed concerns about continued inflation, which may prompt the Reserve Bank of Australia to raise interest rates again, offsetting a boost from last week's budget.

A Westpac survey on Tuesday showed sentiment fell 0.texasholdemzynga.3% to 82.2 points, with 100 points being the dividing line between pessimists and optimists. This comes after Treasury Secretary Jim Chalmers released his annual fiscal blueprint, which may be the centre-left government's last blueprint before the election.

"The new round of cost-of-living pressures and inflation concerns has more than offset the seemingly relatively popular federal budget," said Matthew Hassan, senior economist at Westpac Bank. "While expectations improved slightly in May, they were overshadowed by further deterioration of current conditions and concerns that continued high inflation may require further interest rate hikes."

Australia face an income squeeze from persistently high inflation and rising borrowing costs, which are currently at a 12-year high of 4.35%. Central banks around the world are trying to gauge whether to maintain policy tightening for longer to curb price increases, or whether they can begin to relieve the pressure.

In addition to budget spending measures, including energy tax rebates, households will also benefit from tax cuts that will take effect July 1.

"Importantly, the level of sentiment and responses to other questions about the July tax cuts suggest that consumers will continue to restrict spending into the second half of the year," Hassan said.

The Reserve Bank of Australia raised interest rates by 425 basis points between May 2022 and November 2023, the most aggressive tightening cycle in a generation, as it attempts to contain inflation breakthroughs triggered by stimulus measures during the epidemic.

Westpac's survey also showed: Responses to additional questions about the budget's impact on household finances suggest fiscal measures are relatively popular.texasholdemzynga; Compared with a year ago, the financial sub-index fell 3.6% to only 63.2; the time to purchase major commodities also fell, down 2.8% to 76.5; the time to purchase homes increased 1.6% to 76.5.

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