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Australia's Consumer Confidence Gains Slightly but Sentiment Still 'Deeply Pessimistic,' Says Westpac

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Australia's Westpac-Melbourne Institute Consumer Sentiment Index rose 4.1% to 83.9 in July from 80.6 in June, as consumers showed relief that worst-case scenarios such as higher energy prices had not played out, according to a Tuesday report by Westpac.

Despite the gain, sentiment remains "deeply pessimistic," with the index still in the bottom 10% of results over the survey's 50-year history, as family finances remain under intense pressure and the outlook is uncertain, the report said.

The family finances versus a year ago sub-index rose 5.6% to 71.1, while the family finances next 12 months sub-index posted an over 13% rebound to 96.5, reflecting reduced fears about the year ahead.

The Westpac-Melbourne Institute Mortgage Rate Expectations Index fell a further 5.8% to 162.6 in July, down 10% from May's peak, while the Unemployment Expectations Index dropped 7.1% to 129.9, reflecting growing optimism about the labour market outlook.

The time to buy a dwelling index rose 5.3% to 85.4 in July, continuing a recovery from the extremely weak May reading of 72, per the report. Westpac said it expects inflation to remain "too high" in the June quarter update and anticipates a further 25-basis-point rate increase from the Reserve Bank of Australia in August.

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