7 minute read 17 Jun. 2024

There’s no simple explanation for consumer sentiment in Australia, but the collective gloom is hard to shift.

Tune into how consumers feel to navigate the uncertainty

By Marc L’Huillier

EY Consulting Partner and Oceania Consumer Insights Lead

Consumer Insight Expert. Transformation Leader. Thinker. Writer. Father. Rugby Enthusiast.

7 minute read 17 Jun. 2024
Related topics Future consumer index

Australian consumer sentiment is suppressed and the collective gloom is unlikely to shift anytime soon.

In brief:

  • Australians are experiencing entrenched despondency and financial strain.
  • There’s intriguing tension between consumer sentiment and rational economic indicators.
  • More disciplined spending habits, increased price sensitivity and a shift towards value-based purchasing decisions reflect the consumer vibe.

“It’s the vibe.” These words, immortalised by Dennis Denuto in the Australian cinematic classic The Castle, help explain why a stark one-quarter of Australian consumers feel worse than they did just three months ago, even though economic conditions have not markedly deteriorated.

Entrenched despondency and growing fatigue defines the mood and mindset for most, with Australians feeling like they are in a Groundhog Day holding pattern with little to be excited about anytime soon.

It is this elusive emotional ‘vibe’ of consumer sentiment – essentially how people feel about what is happening and what will play out – that Australian businesses must tune into if they are to successfully navigate the terrain ahead as the balance of 2024 unfolds and beyond.

EY has been capturing data on consumer sentiment and behaviours since 2020 in our EY Future Consumer Index. In our 14th wave of research, undertaken in March and April 2024, we surveyed 23,000 consumers across 30 countries, including 1,000 in Australia. 

The data tells the story of the pressure on consumers:

Ongoing cost of living burden: The rising cost of living remains the dominant concern. Despite inflation tempering from a high of 7.8% in December 2022 to 3.6% in April 2024.1, eight in 10 consumers are worried about the rising cost of living and one in two are stressed about the affordability of day-to-day essentials. Six in ten (61%) say they are cutting back on non-essentials. Economic data shows that groceries are absorbing a higher relative proportion of household spend than at any time in the past 14 years2, with the exception of when Australia was at peak lockdown and people couldn’t easily spend out of home.

Continued mortgage pressure: One in three households with a mortgage are anxious about the potential for further increases to home loan interest rates as 2024 unfolds. Two in five mortgage holders (43%) are feeling the stress of affording essentials, making discretionary purchases and repaying their home loans. Close to three in 10 (29%) say they are worried that they may be forced to sell their home - a confronting statistic. High interest rates continue to haunt mortgage holders; they also radiate out to the third of Australians who are tenants in a tight rental market. Rents are at a record national high of $627 per week –8.5% higher than this time last year3.

Subdued financial outlook: More than one in two consumers (55%) are worried about their personal finances. Very few (only 6%) can be described as optimistic about their financial outlook. Beyond the direct financial pressure, escalating geopolitical issues and conflicts abroad, combined with homegrown social tensions, are making people feel less secure and more guarded. The instability also sees people pull more to the extremes on the political spectrum.

Current Outlook

Feelings compared to 3-4 months ago: national




About the same



The Future Consumer Index, Key Data Snapshot


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Current outlook

Feelings compared to 3-4 months ago: State


Financial outlook overview

The sustained malaise reflected in the EY Future Consumer Index is reinforced by Westpac’s long term consumer sentiment data. In April, Westpac analysts noted that “outside of the deep recession of the early 1990s, this is easily the second most protracted period of deep consumer pessimism since we began surveying in the mid-1970s”4. Consumer confidence is locked in at well below pandemic levels.

With the lion’s share of Australians feeling somewhere between flat and anxious, the times are challenging for consumer-facing organisations and precarious for governments. The 2024 Federal Budget focused on measures to alleviate the pressure on households, but it came with words of caution. Treasurer Jim Chalmers noted the “considerable uncertainty” that makes Australia’s future hard to forecast and called the global outlook “fraught and fragile”. 

Is it all that bad? The vibe versus the headline data

Over years of research, we have found Australian consumers typically adopt a more pessimistic outlook in times of economic tumult and uncertainty than their international peers – even when the performance of the economy should suggest a slightly less despondent outlook. At this point in time, the lead economic indicators are not significantly deteriorating, but we have higher proportions of Australians feeling worse and many feeling trapped in a holding pattern.

In the economy, we are at a point now where domestic unemployment remains low, the labour market is strong, immigration is at record highs and inflation is slowly moving back within the Reserve Bank’s target range. The International Monetary Fund’s global economic outlook for Australia is for modest growth.

A purely rational view would suggest the pessimism is overstated. However, consumers are driven by emotion and the current feelings are cumulative, viral and that’s where the contradiction lies.

In some developed economies, economic commentators have used the term “vibecession” to describe the prevailing mood – one in which negative views about the economy don’t seem to match up with prevailing signs in the economic data.
Marc L’Huillier
EY Consulting Partner and Oceania Consumer Insights Lead

The vibecession has been prevalent in the United States, where the economy is showing comparative strength, but consumer sentiment remains stubbornly suppressed. 

There’s no simple explanation, but the vibe is all about how people are feeling and right now there is a collective gloom that is hard to shift. Certainly, the financial pressure on individuals and households is the catalyst, but there’s more to it. The disruption and volatility stretching back to the start of the pandemic are drivers. The emotional legacy of the lockdown years and beyond still has a long way to play out.

Then there’s the amount of noise generated by politicians, policymakers, and media commentators around the cost of living, interest rates, company collapses, amongst many other high stress areas that dominate the daily news feeds. This rings loudly in the ears of consumers. Those who can least afford to absorb the higher costs and are the most dismayed, frustrated and feel the greatest sense of injustice.

EY Future Consumer Index 14th wave


are concerned about the national economy


are concerned about the rising cost of living


say they are spending less on non-essentials

New shopping frontiers

Ultimately, it doesn’t matter whether consumer pessimism is proportionate to the economic outlook in the hard data. Consumer spend makes up around 60% of GDP in Australia and if they aren’t picking up good vibrations, they won’t bring back their spendthrift behaviour. Consumers are continuing to adjust their shopping behaviour – and consumer brands need to fine-tune their value propositions to maintain their customers. In retail, we are seeing:

More rigour, less spontaneity: Consumers are shopping with more discipline. They are showing a greater propensity to plan meals and to stick diligently to shopping lists.

More baskets, fewer trolleys: More frequent grocery shopping means consumers are buying less each visit.

More mercenary, less loyal: Australians are more inclined to look in their peripheral vision and switch to cheaper alternatives or store brands and are prepared to make trade-offs when weighing up the value equation. Frugality is rife.

Multi-store over one-stop-shop: The trend for shoppers to buy from multiple stores to get the best deals, especially as they become savvier about price setting and promotion cycles, continues.

Price over values: An overall decline in premium priced sustainability products reflects consumers’ need to trim expenses and reconsider their purchase hierarchy.

A quick shift or a slow grind out?

Board directors across Asia Pacific surveyed as part of the EY Board Matters series ranked ‘the economy’ as their number one issue for 2024. However, we are at a point in time where interpreting economic and consumer sentiment is challenging and not necessarily following traditional norms.

Many Australians feel flat and worn down after years of uncertainty and tough cost-of-living pressures. Coming out the other side of this ‘great emotional compression’ will perhaps take longer than many brand leaders expect. It won’t be a quick shift in sentiment, but likely a slow grind out. 

Consumers thrive on certainty and positive momentum builds when they can see the road ahead with clarity. Uplifts in sentiment are rarely even or equal, and the climb out of the doldrums is slower than the descent. 


There is likely to be a tipping point in consumer confidence, where after the slow climb it will accelerate at pace. When will that start? It will all comes down to one thing: the vibe.