Consumers in Western Australia have continued to benefit from affordable prices, with record low petrol prices weighing down on national inflation (the headline annual inflation rate is currently at 1.7 per cent).
Consumers in Western Australia have continued to benefit from affordable prices, with record low petrol prices weighing down on national inflation (the headline annual inflation rate is currently at 1.7 per cent). The Westpac- Melbourne Institute Index of Consumer Sentiment recovered 3.5 per cent to 83 in January 2016, fuelled by a rally in iron prices during the month.
All index components increased significantly over January, with the exception of family financial conditions over the next 12 months.
The 19.8 per cent decline in this sub index reflects concerns attached to expected weakening in the mining sector for 2016, as potential job cuts and slow wage growth continue to dampen sentiment.
Although there was an increase in pessimism for future financial conditions, majority of consumers believed that current financials were stronger than the previous year (up 16.4 per cent).
As such, the sub-indices for economic conditions in the next five years and the year ahead, were up 16.1 per cent and 1.6 per cent respectively.
Iron ore showed signs of strong recovery in January (nudging over $43 per tonne); however, volatility in global economic conditions should continue to impact negatively on commodity prices, adding to losses during the production phase of mining.
The weaker dollar has retracted from terms of trade and should remain a significant downside risk to domestic income and economic growth over the year.
On the contrary, given impending economic conditions borne by our major trading partners, a lower exchange rate is beneficial in keeping exports attractive and encouraging trade, provided there is economic stability.
Subpar labour market conditions will continue to persist through 2016, as job cuts in the mining and manufacturing industries pan out. While confidence for household spending and housing affordability should remain strong over the year, overall sentiment is expected to remain relatively subdued, on the back of a softer economic outlook for Western Australia.