24 May 2010

Consumer confidence falling in Australia

10:28 am on 24 May 2010

Consumers in Australia appear to be losing confidence amid steadily rising interest rates and a flagging sharemarket.

The latest Westpac index showed consumer sentiment plunged 7% this month - the biggest since the height of the financial storm of 2008.

Consumer sentiment in Australia recently returned to the levels of before the global financial crisis, due to rising house prices, good superannuation fund returns and a buoyant labour market.

However, a Radio New Zealand business correspondent in Sydney says it seems a succession of six increases in official cash rates by the Reserve Bank is finally starting to dent confidence, as have recent ructions on financial markets.

The sharemarket is now at a nine-month low and the Australian dollar has gone into reversal after earlier getting close to parity with the US dollar.

Radio New Zealand correspondent says the upshot is the RBA is now signalling it may have done enough on rates for now at least.