AUSTRALIA: Inflation & Unemployment Fears Keeping Confidence Depressed

Australia’s “misery index” began to improve in 2023 and continued until mid-2025 but it then began to deteriorate with the pickup in inflation, which was partly due to base effects from the expiry of government electricity rebates but also rising price pressures as demand exceeded supply. How consumers perceive labour market conditions and inflation impacts their overall sentiment even though it can sometimes be with a lag. Therefore, it was unsurprising that seasonally-adjusted Westpac consumer confidence began to deteriorate even though it wasn’t until January but before the onset of the Iran War and associated fuel price rise. Labour underutilisation had also started trending higher. In June Westpac noted that cost-of-living concerns remain at the fore and so confidence also remained lacklustre. Unemployment expectations were stable but above the historical average.

Australia misery index vs consumer confidence

Source: MNI - Market News/LSEG