The Westpac Melbourne Institute Index of Consumer Sentiment rose by 0.4% in July from 96.2 in June to 96.6 in July.

This is the eighth consecutive month where the Index has printed below 100 indicating that pessimists continue to outnumber optimists. The Index is not sending encouraging signals about the outlook for consumer spending. Having said that, developments around interest rates during the month could have been much more damaging for confidence than turned out to be the case. Banks increased rates on 'interest only' mortgages while there was considerable media speculation about prospects for rising rates overall.