The Delta variant lockdowns may be over but Australians now appear to be fretting over the Omicron strain of the coronavirus, as well as worrying over the inflation and interest rate outlooks.
The Westpac-Melbourne Institute consumer sentiment index fell one per cent in November, although at 104.3, optimists are still comfortably outnumbering pessimists.
Westpac chief economist Bill Evans said a positive national index is very important for the strong growth outlook he sees for 2022, which is dependent on a surge in consumer spending as Australians draw down on their COVID accumulated savings.
However, while high vaccination rates have allowed the Delta states to reopen, Mr Evans said there appears to be a heightened sensitivity surrounding the emergence of Omicron strain and the continued circulation of COVID-19 locally.
"There was a clear difference in responses between the states hit hardest by recent Delta outbreaks and the rest of Australia," Mr Evans said.
Both NSW and Victoria posted significant falls in confidence in December - down 3.6 per cent and 3.5 per cent - while sentiment was up 3.4 per cent in Queensland, 3.2 per cent higher in Western Australia and jumped 7.1 per cent in South Australia.
But Mr Evans said the survey suggested there were other reasons, aside from the recent virus developments, making consumers somewhat more cautious.
Every quarter, survey respondents are asked about which news topics attracted their attention and whether it is viewed favourable or unfavourable.
"We found a sharp increase in awareness of inflation," Mr Evans said.
The survey found 21 per cent recalled news on inflation compared to just five per cent a year ago, with 71 per cent describing the news as bad when it was viewed as positively by 56 per cent of respondents in December 2020.
Similarly, the assessment of news on interest rates has shifted from 58 per cent being positive a year ago to 60 per cent now reporting negative news on this front.
"On the other hand, the assessment of news around the wider economy and employment remains positive, albeit somewhat softer than earlier in 2021," Mr Evans said.
However, Treasurer Josh Frydenberg is confident the Australian economy is gearing up for a strong rebound over summer as it reopens for Christmas.
Queensland reopened its borders this week, while international students and skilled workers can enter Australia from Wednesday, as can fully-vaccinated tourists from Japan and South Korea.
"By growing the economy, getting more Australians into work and off welfare we will help secure Australia's economic recovery," Mr Frydenberg said.
