'Dire': New data shows consumer confidence sinks to one of its weakest recorded levels

Marina Karpathios
04:40pm October 07 2026

Westpac economist Matthew Hassan described the latest consumer sentiment survey as "another sober and worrying read", as post-RBA decision sentiment collapsed from 86.9 to just 67.2.

Australians are feeling more pessimistic about their finances than at almost any point outside a recession, as higher mortgage repayments and rising petrol prices continue to squeeze budgets.

For many households, the question is no longer when rates will start coming down, but whether they will rise again before Christmas.

The latest Westpac-Melbourne Institute Consumer Sentiment Index fell 4.7 per cent in October to 80.4, placing it among the weakest readings recorded since the survey began in the 1970s.

Matthew Hassan, Head of Australian Macro-Forecasting at Westpac Economics, says what stands out is the permeating low levels of confidence, rather than the monthly decline itself.

"Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight," he said.

Households are feeling the combined impact of higher mortgage repayments, rising fuel prices and ongoing pressure on everyday budgets. National average petrol prices have climbed back above $2.30 a litre, while the cash rate now sits at 4.6 per cent, its highest level since 2011.

The data suggests the latest RBA decision struck a particular nerve.

Consumer sentiment among people surveyed before the rate rise registered 86.9. For those surveyed afterwards, it plunged to just 67.2.

That nearly 20 per cent decline was the largest gap recorded since Westpac began tracking daily survey responses in 2019.

In a video discussing the results, Hassan described the latest survey as "another sober and worrying read on the consumer", highlighting the sharp deterioration following the RBA's decision and the exceptionally weak results across a broad range of households.

The strain is showing up most clearly in how Australians view their own finances.

The index measuring family finances compared with a year ago fell 8 per cent to 66.9, while the measure tracking whether now is a good time to buy a major household item dropped 7.1 per cent to 83.0. Both remain well below their long-run averages.

Consumers are also increasingly expecting more rate rises ahead. More than 80 per cent of respondents now believe mortgage rates will increase further over the next year, up from 63 per cent in September. Among mortgage holders, that figure is closer to 90 per cent.

Still, there are some pockets of hope. Sentiment around buying a home edged higher, while expectations for house prices also improved slightly. What consumers remain unsure about is where the housing market goes next.

With the RBA meeting again in early November and many consumers expecting further rate rises, households appear to be holding their breath as they look ahead to next year for some relief.

A version of this story first appeared on Westpac IQ. 

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