Consumer sentiment index

IBISWorld forecasts consumer sentiment to average 90.2 index points in 2025-26, representing a downturn of 0.2 index points over the previous year. 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 November 2023 to counter inflationary pressures. 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. Early 2026, however, saw the outbreak of war in the Middle East, bringing chaos to supply chains and upending efforts to rein in inflation.

Consumer sentiment in Australia has been dragged down by a range of events, ranging from a pandemic to war, over the past few years. In 2020-21, consumer sentiment rebounded strongly as discretionary household incomes rose from the severely depressed levels of the previous year, resulting from the pandemic. Rapid growth in demand and improved spending, combined with tumbling unemployment through to 2021-22, kept consumer sentiment positive into 2021-22. Rampant inflation in 2022-23 forced the RBA to lift interest rates throughout the year, contributing to a cost-of-living crisis. Heightened costs related to mortgages, healthcare and energy all negatively impacted consumer sentiment. This sent the consumer sentiment index spiralling downward in 2022-23. Low unemployment and rate cuts in 2024-25 provided relief for consumers' hip pockets, with sentiment rallying again over the year, but still below 100.

2025-26 saw mixed results for consumer sentiment. With calendar year 2025 providing three rate cuts despite persistent inflation, sentiment was on the up during the first half of the 2025-26 financial year. The second half of the financial year, however, saw the start of a war between Iran, Israel and the US, disrupting supply chains and most noticeably creating a fuel shortage. Due to the war, consumer sentiment tanked in the last few months of the financial year, rolling back most of the improvements made earlier. Overall, IBISWorld forecasts the consumer sentiment index to decline at an average annual rate of 2.8 points over the five years through 2025-26.