Unchanged interest rates and support from tax cuts becoming tangible lifted consumer sentiment in August.

The Westpac-Melbourne Institute Consumer Sentiment index lifted 2.8% to 85 in August, up from 82.7 in July. Despite the lift, sentiment remains weak by historical standards—stuck in the 78-86 range for over two years.

Family finances  vs a year-ago sub-index surged 11.7% in August, the largest gain in nine years (excluding the COVID period). The monthly rise was particularly strong for low-income earners. Meanwhile, consumer expectations for the next 12 months also improved. At the same time, rate rise anxiety dissipated with clearer signs of “a monetary easing cycle abroad”, while consumers remain relatively unconcerned about the out look for jobs.