iscover
iscover 
The Westpac-Melbourne Institute Consumer Sentiment Index revealed a fall of 6 per cent in April, down from 95.9 index points to 90.1 following US President Trump’s sweeping worldwide tariffs.
Consumer sentiment had already “weakened sharply” over the course of the survey week, followed by steep falls in the wake of the tariffs on 2 April, as consumers show “deepening unease about developments abroad,” according to Westpac head of Australian macro-forecasting, Matthew Hassan.
The imposed 10 per cent baseline tariff took effect on 5 April 2025, with most goods originating in Australia being subject to this 10 per cent tariff on import into the US.
Prior to Trump’s announcement, respondents reported an index read of 93.9; however, this fell to 86.6 following the announcement, representing a 10 per cent fall in consumer sentiment when compared to March.
“The scale and breadth of tariff increases, which included a 10 per cent tariff on Australian goods, came as a major surprise, triggering a sell-off in global financial markets,” Hassan said.
“With the situation still deteriorating, there is a clear risk of more significant sentiment declines in the months ahead.”
The index also showed “clear tariff-related deterioration” in economic outlook sentiment, with the “economic outlook, next 12 months” sub-index falling by 5.7 per cent to 90.5 points. For the sub-index covering outlook over the next five years, it declined back into “net pessimistic” territory, down by 3 per cent to 98.4.
Additionally, the “time to buy a dwelling” index declined 6.5 per cent to 85.7, “unwinding all of the rate cut related rally over the previous three months,” Hassan said.
“Buyer sentiment is closer to neutral in Melbourne (99) and only slightly downbeat in Sydney (95.4) but is languishing at much weaker levels in Queensland (75.2) and Western Australia (69),” he said.
“The pattern mirrors price performances – relatively weak in the two big capital cities but still rising strongly in the two big mining states.”
On the RBA’s next movements, Hassan said: “Westpac expects the deteriorating external situation, which has had a clear bearing on this month’s weaker sentiment read, and further evidence of a sustained slowing in inflation will see the Board deliver a further 25bp rate cut at its May meeting.
“Indeed, given the scale of the tariff shock unfolding abroad and signs that the knock-on effect on sentiment will weigh on consumer spending, the board is likely to become much more focused on downside risks to growth than lingering questions about inflation.”
[RELATED: Central banks must ‘tread carefully’ following tariff shocks]
