Consumer sentiment index

IBISWorld forecasts consumer sentiment to average 92.3 index points in 2025-26, representing an uptick of 1.9 index points over the previous year. Under Budget 2025-26, the Australian Government is delivering cost-of-living relief to Australians through extended energy bill rebates for households and businesses, Medicare and Bulk-Billing assistance, Commonwealth Rental Assistance and tax cuts, all of which are facilitating a rebound in sentiment. Even so, consumer sentiment has remained below 100 due to a myriad of factors, including elevated cost-of-living pressures, a persistent housing affordability crisis and a softening job market. The RBA implemented a series of cash rate increases from May 2022 to counter inflationary pressures, with the most recent hike in November 2023. After a period of stability, the cash rate underwent multiple cuts in 2025, with three cuts in February, May and August, which helped improve consumer sentiment throughout the year.

Consumer sentiment in Australia has been shaped by a sequence of events over the past few years. Initially, the COVID-19 pandemic, with its associated health risks, lockdowns and travel restrictions, led to a steep drop; this was partially offset by large-scale fiscal support from the government and record-low interest rates. The period was followed by positive consumer sentiment in 2020-21 and 2021-22 as the economy reopened. From 2022-23, rapidly surging inflation and ballooning mortgage costs, combined with broader cost-of-living pressures from rising healthcare and energy costs, eroded sentiment, resulting in a decline in disposable income and household spending. Low unemployment and relief provided by rate cuts in 2024-25 helped ease pressures on consumers and the recovery of disposable incomes and spending.

A hike in the unemployment rate over the three years through 2025-26 has added pressures to real GDP growth. This has resulted in real GDP growth slowing over the three years through 2025-26. This slowdown has influenced consumer sentiment, keeping it below 100 over the past few years. Overall, IBISWorld forecasts the consumer sentiment index to decline at an average annual rate of 2.4 points over the five years through 2025-26.