Australian consumer sentiment ticks higher in July after federal elections

Consumer sentiment in Australia ticked higher during the month of July, a sign that the country’s consumer confidence is improving after a tumultuous federal election. Also, this remains a muted response to the recently slashed overnight cash rate (OCR) by the Reserve Bank of Australia to a new record low of 1.50 percent in its August 2 monetary policy meeting.

The Westpac Melbourne Institute Index of Consumer Sentiment rose by 2.0 percent to 101.0 in August from July, data released showed Wednesday. The confidence index rose in response to the RBA’s monetary policy decision last week.

Also, there were modest increases recorded in current family finances, economic conditions over the next 12 months and whether now was a good time to buy a major household item. However, perceptions towards the economic outlook looking five years ahead, slipped marginally by 0.7 percent.

In addition, Westpac’s index of 'time to buy a dwelling' rose by 10.1 percent, to be up by 9.2 percent over the last year. While the separate house price expectations index was basically flat from July, Bill Evans, Chief Economist at Westpac, noted that it has already increased by 28 percent since the end of 2015.

"However, the decision by banks to raise some term deposit rates following the RBA rate cut has instead given a notable boost--sentiment amongst retirees in particular, posted a strong 7 percent rise," Evans added.

Meanwhile, besides the federal election, the June 23 Brexit vote has also been a major source of concern for Australians. The ramifications of Brexit are expected to play out over many years and could have direct and indirect impacts on Australia.