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# Did the RBA's rate rise shock Australian consumers?
- URL: https://www.benchmarkanalytics.com.au/did-the-rbas-rate-rise-shock-australian-consumers/
- Published: 2026-10-12T20:30:00.000Z
- Updated: 2026-10-12T20:29:59.000Z
- Description: Consumer sentiment was 86.9 before the RBA's September rate decision and just 67.2 afterwards. What does this mean for spending and economic growth?
- Author: Nick Hossack
- Tags: Consumer Confidence, Westpac-Melbourne Institute Consumer Sentiment, RBA

Consumer confidence fell sharply following the Reserve Bank's September interest rate increase, with an extraordinary difference between survey responses collected before and after the decision.

The October Westpac–Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4, from 84.4 in September.

But the headline figure conceals a much more dramatic movement.

Consumers surveyed before the RBA's 29 September decision recorded a sentiment index of **86.9**. Those surveyed afterwards recorded just **67.2** — a difference of 19.7 index points.

Westpac reports that this was the largest pre- and post-decision deterioration since it began tracking daily survey responses in 2019.

The RBA increased the cash rate by 25 basis points to 4.60%, citing persistent inflation and capacity pressures.

Other survey findings reinforce the deterioration. More than 80% of consumers expect mortgage rates to rise over the coming year, while pessimists outnumber optimists across 102 of the survey's 106 demographic and economic subgroups.

There is an important qualification. The survey compares different respondents, not the same households before and after the decision. It therefore cannot establish that the rate increase caused the entire decline.

Nevertheless, the result highlights the RBA's dilemma. Inflation remains above target, but households are becoming increasingly pessimistic.

The critical question is whether this confidence shock translates into weaker spending and employment — potentially doing more to restrain demand than the RBA intended.

Consumer confidence plunges after RBA decision

Westpac–Melbourne Institute Consumer Sentiment Index | October 2026

| Before RBA decision86.960% of respondents | After RBA decision67.240% of respondents |
| ----------------------------------------- | ---------------------------------------- |

−19.7 index points

Difference between pre- and post-decision survey groups

| Overall October index80.4 | Change from September−4.7% |
| ------------------------- | -------------------------- |

Source: Westpac–Melbourne Institute Consumer Sentiment Survey, 6 October 2026\. The before/after figures represent different groups of respondents and do not establish causation.