Far from a happy new year for stressed households

The Westpac-Melbourne Institute consumer sentiment index fell 1.3 per cent this month despite growing expectations that interest rates have peaked, with many, particularly low- and middle-income families, downgrading their financial position compared to a year ago.

Buying intentions for new homes and household goods were "very weak", Westpac senior economist Matthew Hassan said.

Mr Hassan said sentiment was "bumping around deeply pessimistic levels".

The Westpac economist said the current index level was in the bottom 7 per cent of all readings in the history of the survey stretching back almost 50 years.

"More pessimistic starts to the year have only been seen during the deep recession of the early 1990s," he said.

The result adds to evidence about the financial strain being felt by millions of households and underscores calls for more living cost support.

The government, which faces a pivotal byelection in the Victorian seat of Dunkley in the next few weeks, has intensified its messaging around the need to combat inflation and assist households since the start of the year.

Prime Minister Anthony Albanese said on Tuesday that he had asked Treasury and the Department of Finance for "ongoing advice ... about ways in which we can provide support for people whilst putting downward pressure on inflation".

Treasurer Jim Chalmers has also been in discussions with the Australia Competition and Consumer Commission about concerns that the major supermarkets are not passing on lower meat, fruit and vegetable prices on to their customers.

An ACCC spokesperson said that the watchdog was "very conscious" of grocery price concerns.

The spokesperson said strong competition was an important factor in holding prices down and the ACCC was closely watching potential mergers and acquisitions in the sector.

The ACCC said evidence showed that weakened competition was affecting the economy and warned that, "consumers and businesses will pay higher prices and have less choice if anti-competitive mergers are able to continue to proceed".

But opposition treasury spokesman Angus Taylor has accused the government of being "slow to act" on inflation.

"We have the most persistent inflation of any advanced country in the world, according to The Economist; one of the very highest levels of inflation of all the advanced economies, and the longer we take to sort this out, the more prices go up," Mr Taylor said.

But the government has seized on monthly consumer price index data showing headline inflation slowed to 4.3 per cent in November.

While admitting that there was "more to do", Mr Albanese said the result showed inflation was heading in the right direction.

The prime minister also took a swipe at Opposition leader Peter Dutton over his call for shoppers to boycott Woolworths over its decision not to stock Australia Day merchandise.

"We are fighting for things to be cheaper in stores. Peter Dutton is fighting over what goes into stores in a culture war," the prime minister said.

Mr Albanese said the supermarket giant employed 200,000 and, "Peter Dutton needs to explain to those 200,000 Australians why they shouldn't continue to be employed. Because if no one goes into their stores...then the company stops trading and people lose their jobs."

Meanwhile, figures show significant numbers of people continued to arrive in Australia late last year.

The Australian Bureau of Statistics reported there were 1.71 million arrivals from overseas in December, pushing the total annual influx to 18.25 million, while there were 17.83 million departures through the year, a net gain of 950,000.

The data shows there has been a shift towards more long-term stays among arrivals from overseas since before the pandemic.

In November 2019, just 2.1 per cent of overseas visitor arrivals were long-term but in November last year that proportion had jumped to 3.2 per cent to 50,540.

These arrivals are in addition to those planning to settle in Australia, who are counted separately and amounted to 13,940 people in November.

The vast bulk of arrivals were short-term visitors, including to the ACT.

The ABS figures show Canberra's international tourism market is strengthening but is yet to reach pre-pandemic levels.

There were 8120 short-term arrivals from overseas in November last year, the third-biggest monthly influx for 2023, but it was still 1400 less than arrived four years earlier, according to the Australian Bureau of Statistics.

The largest group of visitors (1210) was from the United States, followed by New Zealand (970), China (940), India (740) and the United Kingdom (580).

Short-term arrivals from New Zealand last November exceeded the number who came in November 2019, but the influx of visitors from the US and China still lags substantially from the levels reached before the outbreak of COVID-19.

The government expects the inflow of migrants to slow during this year, easing some of the pressure on the nation's very tight housing market.

Economists and investors are also speculating that interest rates have peaked and could start to come down later this year, possibly from August.

Mr Hassan said December quarter inflation figures due out on January 31 would be "critical".