The Westpac-Melbourne Institute Consumer Sentiment index reversed its prior gain, falling 2.6% to 79.9 in November, returning to “deeply pessimistic levels”. The Reserve Bank’ November interest rate hike has renewed pressures on household finances, reigniting cost of living concerns and expectations of further rate increases. Last month 63% of surveyed respondent expected mortgage interest rates to rise higher in the coming months, that increased to 73% in November.

According to Westpac, the weak November sentiment is an ominous sign heading into the Christmas season with pessimism influencing spending. The most recent survey asked consumers of their Christmas spending intentions with 40% of respondents planning to spend less on gifts than last year – in line with responses from last year.