Consumer confidence has collapsed almost 10 per cent as a result of Victorian coronavirus restrictions, plunging close to the low recorded earlier this year when the whole country was shut down.
The monthly Westpac-Melbourne Institute consumer sentiment index fell to 79.5 points in August.
It is now back down towards the low of 75.6 points in April, when Australia entered a national lockdown.
“The scale of the falls comes as a major surprise,” Westpac chief economist Bill Evans said on Wednesday.
“The biggest surprise was in NSW where sentiment collapsed by 15.5 per cent, well in excess of the 8.3 per cent fall in Victoria.”
Even in Queensland, where cases have been largely curtailed, there was an 8.1 per cent fall in confidence.
“This emphasises the fear of the unknown,” Mr Evans said.
“Consumers across the nation appear to have been rattled by the developments in Victoria and fear that other states may also succumb to the second wave outbreak.”
Mr Evans believes these widespread fears are overblown and will ease in coming weeks.
Even so, Westpac expects the Morrison government will commit to providing generous ongoing support for the economy.