Australia consumer confidence declined sharply as respondents were concerned about the risk associated with Cyprus banking crisis and prospects of rising interest rates in the domestic economy.
The consumer confidence index dropped 5.1 percent in April to 104.9, data from Melbourne Institute and Westpac Bank showed Wednesday. "This is a surprising result," Westpac's Chief Economist Bill Evans said.
"While it was reasonable to expect the recent momentum in the Index over the last two months to have slowed in April, a 5.1 percent fall was not expected," he said.
The survey results emphasis how fragile consumer sentiment has become in the current environment. Reasons for the April fall are probably best assumed to be around global concerns and an associated correction in the share market, Evans noted.
There was also some media reports locally around prospects of rising interest rates perhaps as soon as year end. Evans expects no change in rates at the upcoming Reserve Bank Board meeting on May 7. But he forecasts the rates to come down further in 2013 as there is a need for the economy to get more stimulus.
All five components of the Index were down in April. The sub-indexes tracking 'family finances compared to a year ago' dropped 3.9 percent and the 'outlook for family finances over the next 12 months' eased 0.2 percent.
Similarly, the 'outlook for economic conditions over the next 12 months' plunged 4.5 percent and 'outlook for economic conditions over the next 5 years' eased 8.3 percent. The 'time to buy a major household item' decreased 7.6 percent, the survey showed.
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