Originally published by Cameron Micallef of The Australian.
09.06.2026
Consumers remain “deeply pessimistic”, as the rising cost of living and changing tax policies have many fearing their budgets will have to stretch further than ever.
Fresh Westpac-Melbourne Institute figures show consumer sentiment fell a further 2.9 per cent to 80.6 in June. A score of 100 or more reflects optimism about the future.
Westpac head of Australian macro-forecasting Matthew Hassan said households were already changing their behaviour, even though the economy was technically still growing.
Australia’s economy grew by 0.3 per cent in the March quarter, although the pace of growth slumped from 0.9 per cent for the three months to December 31.
“Consumers are clearly bracing for more bad news on the financial front,” Mr Hassan said.
The survey data reveals a fall in purchasing attitudes.
The “time to buy a major item” subindex rose 0.9 per cent, but at 86.4 is still weak by historical standards and well below the long-run average of 123.
Mr Hassan said buyer restraint was “clearly still the order of the day” for most people.
The cost-of-living subindexes also point to fears of inflation “coming back with a vengeance” in June.
The subindex for family finances was down a further 7.5 per cent compared with a year ago to 67.3, and hopes for the next 12 months plunged 8.5 per cent to 85.1.
People are also negative about the overall economy, although fears are slowing. The Westpac-Melbourne Institute said consumer sentiment on the economy in the next five years fell 3.2 per cent to a new three-year low of 86.5.
Separate KPMG research found that people were happier during the Covid-19 pandemic than they are today.
According to KPMG’s analysis of the Australian Bureau of Statistics general social survey, life satisfaction has fallen over the past six years.
KPMG urban economist Terry Rawnsley said the fall in life satisfaction coincided with deteriorating household financial conditions. “Over the last five years, there hasn’t been a lot of positive progress for Australian households,” he said.
“Real wages are down, household consumption is kind of flat, median household wealth is pretty flat, so there has been a period of five years of financial stress, whereas in the pandemic it was a short, sharp shock.”
According to the ABS, younger and middle-aged Australians are feeling the pinch.
Those aged 25-34 recorded the lowest life satisfaction at 6.8, down from 7.5 in 2019, representing the largest fall of any group. “The decline in life satisfaction among 25-34-year-olds reflects the reality of Australia’s housing market,” Mr Rawnsley said. “This is a group facing high rents or large mortgages at the same time as real incomes have gone backwards.”
People aged 45-54 also reported comparatively low life satisfaction. “The ‘sandwich’ generation are starting to feel significant financial pressures caring for both ageing parents and trying to support their children whose ability to generate their own wealth has flatlined,” Mr Rawnsley said.
The falls in life satisfaction also comes as more people than ever are reporting severe financial stress. One-fifth of households are unable to raise $2000 within a week, up from 19.5 per cent in 2019.
More than a quarter have experienced at least one cash flow problem or engaged in actions such as drawing down on savings or increasing their debt.
