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Consumer Sentiment in Australia Suffers from Inflationary Pressures

The Westpac-Melbourne Institute has announced that the Australian Consumer Sentiment Index fell in February. The main reason for the falling sentiment is rising inflation. Households are having to shoulder a heavier debt burden as prices rise. Rising borrowing costs are also contributing to this. Energy prices, especially oil prices, are weighing heavily on households.

The consumer sentiment index fell 1.3% in February to 100.8.

The survey data, however, indicates that consumers have a positive view of the economy, but a negative view of personal finances.

Bloomberg News reported earlier this year that Reserve Bank of Australia (RBA) Governor Philip Low held out the prospect of a rate hike this year. Economists expect the RBA to raise interest rates for the first time around June.

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