Consumer sentiment has taken a sharp 8.3 per cent fall from 101.2 in June to 92.8 in July, the Westpac-Melbourne Institute Index of Consumer Sentiment reported.
"This is a surprisingly weak result,” Westpac’s chief economist Bill Evans said.
“This is the lowest level for the Index since May 2009. During the February 2008 to May 2009 period the Index averaged 88.”
According to Evans, the combination of concerns over the European financial crisis; the ongoing impact of the seven interest rate hikes between October 2009 and November 2010; and uncertainty about the introduction of a price on carbon are to blame.
“Not only is the level of the Index disturbingly low but the sheer magnitude of the fall is also remarkable,” Evans said.
There has only been 11 falls of this magnitude since the early 1990s recession and have often been associated with major events such as interest rate hikes, a spike in petrol prices, the collapse of Lehmans or recession fears.
Westpac-Melbourne Institute Index of Consumer Sentiment also found that the largest fall in confidence of -11.1 per cent was in the highest income group while the confidence of those with mortgages also plummeted by 16.5 per cent.
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