In January 2025, Australia’s Consumer Sentiment Index in Australia recorded a decline of 0.7%, bringing the index down to 92.1 points. This marks the second consecutive monthly decrease, pointing to ongoing consumer pessimism. The slight drop follows a series of economic concerns and reflects how Australians are responding to current economic conditions.

The Impact of the Australian Dollar’s Decline

The weakening of consumer sentiment during the survey period can largely be attributed to the depreciation of the Australian dollar against the US dollar. As the Australian dollar lost value, negative headlines began circulating about the potential impact on interest rates and the broader economic forecast. These reports likely fueled concerns about financial stability and future economic growth, contributing to the overall drop in sentiment.

A Slightly More Positive Outlook Than a Year Ago

Despite the recent decline, consumer sentiment in January 2025 is still less negative compared to the same period in 2024. Some components of the survey suggest that consumers are expecting gradual improvement in the economy over time. This indicates that while there is ongoing caution, there is also hope for a rebound in the longer term.

Read More: Australia Inflation Expectations

Diverging Trends in Current vs. Forward-Looking Conditions

The survey revealed a mixed picture when it comes to the different sub-indexes. The two sub-indexes tracking current conditions both fell, suggesting that Australians feel more uncertain about the present economic climate. However, forward-looking indexes either remained flat or saw slight increases, a shift from the previous month, hinting at a somewhat more optimistic view of the future. This divergence in trends highlights the complexity of consumer sentiment, with mixed expectations for both the immediate and long-term future.

Source