Australian consumer confidence up but well below last year

Unsettled financial markets and the falling value of the Australian dollar were offset by the possibility of an interest rate cut, meaning consumer confidence hardly budged in October. Photo / Supplied

Australian consumer confidence rose slightly this month but is still well below the levels at the same time last year.

Unsettled financial markets and the falling value of the Australian dollar were offset by the possibility of an interest rate cut, meaning consumer confidence hardly budged in October.

The Westpac-Melbourne Institute Index of Consumer Sentiment rose 0.4 per cent to 97.2 in October, from 96.9 in September.

It rebounded strongly in September after falling to 89.6 in August, its lowest level since May 2009.

But consumer confidence is still well below 2010 levels, with the index for October lagging more than 15 per cent behind the same time last year.

Westpac chief economist Bill Evans said conflicting signals made October's forecast particularly difficult, but a softening of Reserve Bank of Australia rhetoric in relation to interest rates had buoyed sentiment in the face of a weakening dollar and unsettled financial markets.

"The fall in the Australian dollar had a significant impact on sentiment towards buying a major household item, falling by 5.6 per cent," Evans said.

Other components of the index showed modest gains.

The outlook on the future gained ground, with expectations for economic conditions over the next 12 months up almost 1 per cent and for the next five years up more than 4 per cent, Evans said.

"The [Reserve] Bank reported that it had adopted an easing bias at its October Board meeting."

- AAP