After reaching multi-year lows in April, May’s consumer sentiment reading from Westpac-Melbourne University rose 3.5% to 83 in May, up from 80.1 in April.

Despite the improvement, Australian consumers remain deeply pessimistic, according to Westpac. The survey was taken during the week federal budget was released, with responses showing a slight improvement following the budget’s release. Respondents were optimistic in assessments of family finances, with subindices posting recovery. Meanwhile, subindices tracking expectations for the economy over the next 12 months and next five years slipped. 

The Reserve Bank is expected to pause rate hikes in June after three consecutive increases to assess impacts of higher energy costs and tighter monetary policy. Consumer sentiment data shows demand is slowing due to rising interest rates and cost-of-living pressures, while inflation risks remain elevated.