Westpac Consumer Confidence Change for December 2025: A Modest Decline Amid Mixed Signals
Key Takeaways: December 2025 saw Westpac Consumer Confidence Change dip by -1.70%, improving from November’s sharper -9.00% fall but missing the 2.60% consensus estimate. This signals a tentative pause in consumer sentiment recovery after a volatile second half of 2025. Core macro indicators and monetary policy tightening continue to weigh on confidence, while external risks and fiscal measures add complexity to the outlook.
Table of Contents
- Big-Picture Snapshot
- Foundational Indicators
- Chart Dynamics
- Forward Outlook
- Closing Thoughts
- Key Markets Likely to React to Westpac Consumer Confidence Change
Westpac Consumer Confidence Change for December 2025 registered a -1.70% decline, a notable improvement from November’s -9.00% drop but below the 2.60% forecast, according to the Sigmanomics database. This indicator measures the month-over-month change in consumer confidence, reflecting household sentiment about economic conditions, spending, and financial wellbeing in Australia.
Drivers this month
- Moderation in inflation pressures eased cost-of-living concerns slightly.
- Rising interest rates continued to dampen borrowing appetite.
- Mixed labor market signals created uncertainty about income growth.
- Global geopolitical tensions and commodity price volatility added risk aversion.
Policy pulse
The Reserve Bank of Australia (RBA) maintained a hawkish stance with recent rate hikes, aiming to curb inflation near its 2–3% target. Financial conditions tightened, reflected in higher mortgage rates and subdued credit growth, which likely restrained consumer optimism.
Market lens
Following the release, AUD/USD weakened modestly by 0.30%, while 2-year government bond yields edged down 5 basis points, signaling cautious market positioning on near-term growth prospects.
Consumer confidence is a vital forward-looking gauge of household spending, which accounts for roughly 55% of Australia’s GDP. The December 2025 reading of -1.70% contrasts with the volatile swings seen earlier in the year, including a peak increase of 12.80% in November 2025 and a trough of -9.00% in the prior month.
Historical context
- December’s -1.70% change compares to October’s -3.50% and September’s -3.10%, showing a partial recovery from mid-fall declines.
- The 12-month average change stands near 0.70%, indicating that December’s dip remains below the longer-term trend.
- Year-over-year, December 2025’s change is weaker than December 2024’s 2.20%, reflecting ongoing headwinds.
Monetary policy & financial conditions
The RBA’s cumulative 125 basis points of rate hikes since mid-2025 have increased borrowing costs. Mortgage rates rose above 6%, dampening housing market activity and consumer credit. Inflation, while easing from a peak of 7.80% in mid-2025 to 5.10% in December, remains above target, sustaining cautious consumer behavior.
Fiscal policy & government budget
Fiscal stimulus has been limited, with the government focusing on deficit reduction and targeted social support. The December budget update confirmed restrained spending growth, which may limit near-term income support for households.
This chart reveals a consumer confidence trend that is cautiously recovering but remains fragile. The December reading suggests that while some inflation relief and labor market resilience support sentiment, ongoing rate hikes and global uncertainties continue to weigh on household optimism.
Market lens
Immediate reaction: AUD/USD slipped 0.30% post-release, reflecting disappointment versus expectations. Australian 2-year bond yields fell 5 basis points, indicating a modest shift toward risk aversion. Equities showed limited reaction, with the ASX 200 closing flat.
Looking ahead, consumer confidence in Australia faces a complex interplay of factors. The following scenarios outline potential trajectories:
Bullish scenario (25% probability)
- Inflation falls rapidly toward 3% by mid-2026, easing cost pressures.
- RBA signals a pause or cut in rates, improving borrowing conditions.
- Labor market strengthens, boosting wage growth and disposable income.
- Consumer confidence rebounds above 2% monthly change, supporting GDP growth above 3%.
Base scenario (50% probability)
- Inflation declines slowly, remaining near 4–5% through 2026.
- RBA maintains a cautious stance with stable rates.
- Labor market remains steady but wage growth is moderate.
- Consumer confidence fluctuates around zero to slightly negative monthly changes, implying subdued but stable consumption.
Bearish scenario (25% probability)
- Inflation surprises on the upside due to external shocks (commodity prices, supply chain disruptions).
- RBA tightens further, pushing rates above 6.50%.
- Labor market weakens, increasing unemployment above 5%.
- Consumer confidence falls below -3% monthly change, risking a contraction in household spending and GDP growth below 1%.
Risks and opportunities
External shocks such as geopolitical tensions in the Indo-Pacific and commodity price volatility remain key downside risks. Conversely, fiscal stimulus or a faster-than-expected inflation decline could provide upside support.
December 2025’s Westpac Consumer Confidence Change reflects a cautious consumer base navigating a challenging macroeconomic landscape. The modest -1.70% decline, while better than November’s sharp drop, underscores persistent headwinds from monetary tightening and inflation. Policymakers and market participants should monitor upcoming inflation data, labor market reports, and geopolitical developments closely to gauge the trajectory of household sentiment and spending.
Overall, consumer confidence remains a critical barometer for Australia’s economic resilience in 2026. The balance of risks suggests a cautious outlook with potential for both stabilization and renewed volatility depending on policy and external factors.
Key Markets Likely to React to Westpac Consumer Confidence Change
The Westpac Consumer Confidence Change is closely watched by currency, bond, equity, and commodity markets. Consumer sentiment influences household spending, credit demand, and economic growth expectations, which in turn affect asset prices.
- AUDUSD: The Australian dollar often moves in tandem with consumer confidence, reflecting growth and interest rate expectations.
- ASX: Australian equities respond to shifts in domestic demand and economic outlook.
- USDAUD: The inverse currency pair also tracks sentiment and risk appetite.
- BTCUSD: Bitcoin can reflect broader risk-on/risk-off sentiment linked to economic confidence.
- CBA: Commonwealth Bank of Australia’s stock price is sensitive to consumer credit trends and mortgage demand.
Since 2020, AUDUSD has shown a strong positive correlation with Westpac Consumer Confidence Change, rising during periods of improving sentiment and falling during downturns. This relationship highlights the currency’s sensitivity to domestic economic conditions and monetary policy shifts.
FAQs
- What is the Westpac Consumer Confidence Change?
- The indicator measures the month-over-month percentage change in consumer confidence in Australia, reflecting household sentiment about economic conditions.
- How does consumer confidence affect the Australian economy?
- Consumer confidence influences household spending, which accounts for over half of Australia’s GDP, impacting growth and inflation dynamics.
- What factors drive changes in consumer confidence?
- Key drivers include inflation, interest rates, labor market conditions, fiscal policy, and external geopolitical risks.
Takeaway: December’s modest decline in consumer confidence signals ongoing caution among Australian households amid persistent inflation and tighter financial conditions. Monitoring upcoming data will be crucial to assess whether sentiment stabilizes or deteriorates further in 2026.
AUDUSD – Australian dollar vs. US dollar, closely tracks consumer confidence shifts.
ASX – Australian stock index, sensitive to domestic economic sentiment.
USDAUD – Inverse currency pair reflecting risk appetite and growth outlook.
BTCUSD – Bitcoin price, a proxy for global risk sentiment.
CBA – Commonwealth Bank of Australia, impacted by consumer credit trends.
The December 2025 Westpac Consumer Confidence Change of -1.70% marks a clear improvement from November’s steep -9.00% decline but falls short of the 2.60% consensus. This signals a tentative stabilization after a turbulent autumn period. The 12-month average change of 0.70% highlights that confidence remains below its longer-term trend.
Month-over-month, the indicator reversed some of the prior month’s losses but still reflects subdued consumer sentiment amid tighter monetary conditions and inflation concerns. The volatility seen in recent months underscores the sensitivity of Australian households to economic and geopolitical developments.