Consumer sentiment plummets amidst inflation and rate rises
13 May 2022
Consumer sentiment experienced a steep decline of 5.6% to 90.4 in May 2022, as inflation and rate rises weighed heavily on consumers. The most recent ABS retail sales data is for March 2022 and showed a seasonally adjusted increase of 1.6%. Seasonally adjusted online sales deteriorated for a second consecutive month (4.3% decline in March 2022), suggesting a further shift back to bricks and mortar sales as COVID restrictions ease.
1 month - (5.6%)
12 months - (20.1%)
Source: Westpac – Melbourne Institute Consumer Sentiment Index
Consumer sentiment decreased by 5.6% to 90.4 in May 2022 according to the Westpac-Melbourne Institute Index of Consumer Sentiment. The survey was conducted shortly after headline inflation was reported to have lifted above 5% and the RBA announced the first cash rate rise since 2010, compounding consumers’ existing concerns surrounding the increasing cost of living. Westpac’s consumer sentiment index has now recorded six consecutive monthly declines. The index is now almost 24% below its high in April 2021 and its lowest point since August 2020. If we look back pre-COVID, the index has not been this low since August 2011. When combined with the additional choices consumers now have to spend their money (travel, dining out etc.) retailers face a real revenue challenge.
1 month - 1.6%
12 months - 9.4%
Source: Australian Bureau of Statistics
The most recent ABS data is for March 2022. Despite declining consumer confidence at the time, spending levels still grew in March 2022 by 1.6% to $33.6 billion. March 2022 sales were $2.9 billion higher (+9.4%) compared to March 2021 sales, driven by strong improvements in Department Stores (+4.1%, March 2022) and Household Goods Retailing (+3.4%, March 2022). Sales data varied amongst states, with Queensland (+3.4%), New South Wales (+1.8%) and Victoria (+0.6%) recording growth, while South Australia (-0.7%) was the only state to experience a decline due to flooding in late early March.
Online retail sales
1 month - (4.3%)
12 months - 7.0%
Source: NAB Online Retail Sales Index
Online retail sales recorded a second consecutive month of decline on a seasonally adjusted basis in March 2022 (-4.3%) but remained up in year-on-year terms (+7.0% vs March 2021) and on a rolling 12-month basis (+16.6% higher vs the 12 months to March 2021).