The Westpac-Melbourne Institute Index of Consumer Sentiment fell 6.9%, after a short-lived psot-Christmas rebound in January. Cost of living pressures and interest rate rises continue to weigh heavily with index back near a historic low of 78 recorded in November last year.

The latest sentiment decline follows ABS figures released late last month showing consumer price inflation surged from 7.3% in September to 7.8% in December, taking Australia’s inflation to a 32-year high. Interest rates were also a clear factor weighing on confidence in the month, with the RBA raising the official cash rate by a further 0.25ppts at its February meeting. Given that the move was widely anticipated, the negative response likely reflects the clear signal from the RBA Governor that further increases can be expected in the months ahead.