Consumer confidence slumps

Consumer confidence has fallen to its lowest level since the middle of last year as households grow fearful over Joe Hockey's first Budget.

Westpac's measure of consumer sentiment dropped three per cent in February with the number of optimists and pessimists about equal.

Shoppers are increasingly gloomy about the next 12 months with expectations about the economy slipping to their lowest level since March 2012.

Expectations for the next five years are down even further, sitting at their lowest level since February 2009.

The survey pre-dates the announcement this week by Toyota of its plans to leave Australia by 2017.

Westpac chief economist Bill Evans said there was concern about higher interest rates with more than half of those surveyed expecting rates to climb in the next 12 months.

Almost 20 per cent of those surveyed believe rates will climb by a full percentage point over the next year. Just six per cent of people think rates will fall.

Mr Evans said it was clear consumers were growing more wary about the economy, the Abbott Government's Budget plans and interest rate settings.

"Households seem to be sending a fairly clear message in this survey," he said.

"It is around questioning why fiscal policy is about to be tightened and interest rates lifted when the labour market is so weak and housing affordability is being squeezed."

The survey is at odds with NAB's business survey which showed sentiment and conditions improving in corporate Australia.

Mr Evans said there was some evidence higher house prices were weighing on consumers with sentiment on whether it was a good time to buy down almost 11 per cent since September.

Women are also becoming increasingly pessimistic.

In Westpac's January survey confidence among women was substantially higher than men.

Over the past month confidence among women has dropped by more than 11 per cent.

The West Australian

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