Australian consumer confidence improved substantially in August 2026, supported by stronger household financial expectations and reduced uncertainty following the Reserve Bank of Australia’s latest interest-rate decision.
The Westpac–Melbourne Institute Consumer Sentiment Index increased 6.0% month-on-month to 88.9 in August, compared with 83.9 in July. Despite recording a solid monthly recovery, the index remained below its long-term average of 100.2 and was 9.7% lower than a year earlier. This indicates that pessimists continue to outnumber optimists among Australian consumers.
The improvement was particularly evident among mortgage holders following the RBA’s decision on 11 August to leave interest rates unchanged. Survey responses collected before the announcement showed little movement from July, while sentiment strengthened noticeably after the meeting. In contrast, confidence among renters weakened slightly.
Consumer Sentiment- August 2026 (Source: Westpac–Melbourne Institute Consumer Sentiment Bulletin)
Interest-rate concerns nevertheless remain elevated. Approximately 59% of respondents expect mortgage rates to rise over the next 12 months. However, following the RBA meeting, nearly 28% anticipated that rates would either remain unchanged or decline, up from 21% before the decision.
Households also reported an improved assessment of their current financial position. The family-finances-versus-a-year-ago sub-index climbed 12.6% to 80.0, representing the strongest monthly increase among the survey components. Expectations for family finances over the coming year increased 1.8% to 98.2.
Economic expectations also strengthened. The 12-month economic outlook index advanced 5.8% to 82.8, while the five-year outlook rose 3.2% to 89.8. However, both measures remained below their respective long-term averages, suggesting that confidence in the broader economy remains fragile.
Labour-market expectations provided a less encouraging signal. The unemployment expectations index increased 4.4% to 135.7, indicating that more consumers expect unemployment to rise. The result reversed part of the improvement recorded in July and moved above the index’s long-term average.
Housing-related sentiment was mixed. The time-to-buy-a-dwelling index rose 12.1% to 95.7, its highest level since November 2025. Conversely, the house-price expectations index declined 6.1% to a three-year low of 110.8.
Overall, the August survey points to an improvement in household confidence, but the index’s subdued level, alongside concerns about interest rates, unemployment and house prices, suggests that consumers may remain cautious with discretionary spending. For investors, this could mean an uneven recovery across consumer-facing businesses, with spending likely to remain sensitive to future RBA decisions, inflation trends and labour-market conditions.
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