The Westpac – Melbourne Institute Consumer Sentiment index has just been released and it’s somewhat good news for the economy as the big drop in petrol prices filters through to increased confidence.
The index showed a rise of 2.4%, after last months surprise 5.7% fall, to 93.2.
This is a welcome, but moderate, lift from last month’s weakness in consumer sentiment and Westpac Chief Economist Bill Evans said: “when assessed in the context of the sharp 5.7% fall in the Index in December it is not a particularly strong result. The Index is still down by 9.7% on a year ago and really only back at the levels we saw in the immediate aftermath of the Federal Budget when the Index had tumbled by 6.8%. At 93.2 the Index level indicates pessimists still outnumber optimists by a significant majority.”
That’s important context.
Evans believes the case for an easing in rates from the RBA next mointh is compelling and will be made once CPI is released next week.