Australian households are feeling more financially confident than they have in years after a long slump.Consumer confidence has risen following the Reserve Bank's cash rate cut, with sentiment returning to May 2022 levels (before rate hikes began flooding in), according to the Westpac–Melbourne Institute Consumer Sentiment Index.There was a 4 per cent rise in consumer sentiment in March, lifting to 95.9 per cent from 92.2 last month, the survey found.
Consumer confidence lifted after a three-year slump in March 2025. (9News)This means the index is just four percentage points off the "neutral" level of 100, when there is an equal number of optimists and pessimists. It has coincided with a small uptick in spending data after household consumption lifted by 0.4 per cent in the last quarter of 2024, following two consecutive periods of decline.The strong economic data comes as inflation slows and household financial confidence slightly buoys following the first rate cut in over four years.It has also bolstered confidence that interest rates will continue to tumble."The RBA's decision to cut interest rates in February and a further easing in cost-of-living pressures have provided a clear lift," Westpac head of Australian macro-forecasting Matthew Hassan said."Around family finances, the picture continues to be of a slow improvement but with rising optimism about the year ahead."
The Reserve Bank's rate cut decision delivered a spending confidence boost. (Getty)Buyer sentiment has turned around following what Hassan described as the "longest and deepest period of pessimism since the survey began in the mid-1970s".The extra purchasing power from a rate cut has prompted Australians to open their wallets and buy major household items after holding out for several years.In stark contrast abroad, consumers remain concerned over the ongoing uncertainty associated with US President Donald Trump's tariff war, the survey noted."Responses in March show that while consumers detected a marked improvement in the domestic news flow, the news from abroad has become more troubling," Hassan said.The March index found the economic news from the US is "unsettling" Australian consumers, with 82 per cent finding international conditions unfavourable.