Concerns over interest rate hikes coupled with rising fuel costs push Australia's consumer confidence index close to the extreme pessimism range.

Due to rising fuel costs and concerns that the Reserve Bank of Australia will raise interest rates again, Australian consumer confidence significantly declined in September, drawing closer to the extremely pessimistic range. Westpac Bank stated in a press release on Tuesday that the consumer confidence index fell 5.2% to 84.4 points. Matthew Hassan, head of Australian macroeconomic forecasts at Westpac Bank, stated, This decline brings consumer confidence back near the extremely pessimistic levels seen earlier this year. Surveys indicate that cost of living pressures have intensified once again, with a sub-index measuring household financial situation compared to a year ago plummeting by 9.2%. Hassan pointed out that the price of fuel at local Australian gas stations has risen above AUD 2 per liter for the first time since April, reflecting the impact of rising global energy prices and the end of the temporary halving of fuel excise tax. The survey also revealed that about 64% of consumers expect mortgage rates to rise further in the next 12 months. Following stronger-than-expected inflation and GDP data, the Reserve Bank of Australia is facing pressure to restore interest rate hikes, with its policy meeting just three weeks away. The Reserve Bank has consistently emphasized the necessity of returning the economy to a balanced state, having raised borrowing costs three times in a row from February to May, increasing the cash rate to 4.35%, after which it has remained steady. Hassan noted that stronger-than-expected inflation data intensified concerns about the Reserve Bank of Australia raising interest rates further in the coming months. This has dampened consumer expectations regarding their financial situation and the economic outlook, and may also exacerbate worries about the ongoing weakness in the real estate market. With the Australian government abolishing tax incentives for property investors and the prior interest rate hikes having an effect, the Australian real estate market is in a period of slump. HSBC HOLDINGS Ltd. raised its forecast for the decline in property prices from peak to trough from 8% to 13% on Tuesday. The national house price index from real estate consultancy Cotality fell by 0.9% in August, marking the fifth consecutive month of decline, bringing the cumulative decline in prices from the peak in March to 3.6%. Hassan said, Concerns about interest rates have had a noticeably negative impact on consumers with mortgages. Overall confidence in this group has dropped by 14%, with assessments of whether now is a good time to make major purchases especially pronounced, declining by 18%, indicating that mortgage holders are tightening their spending plans.