Cost of living and interest rates continue to dominate consumer sentiment, which weakened 1.3% in January according to the Westpac– Melbourne Institute Consumer Sentiment Index.

The continued pessimism is despite  a notable easing in fears about further interest rate increases. The January reading is in the lowest 7% of readings since the Index began in the mid-1970s, with more pessimistic new year reading only seen during the mid-1990s recession. Family finances appear to be coming under renewed pressure, with that sub-index falling 7.6% in January, largely reversing the improvement seen in the December quarter.