(Bloomberg) — Australia’s consumer confidence dipped in September due to rising concern about the economic outlook and employment prospects with interest rates at a 12-year-high and expected to remain there for the remainder of the year.

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Sentiment fell 0.5% from the prior month to 84.6 points, with pessimists heavily outweighing optimists given a reading of 100 is the dividing line, a Westpac Banking Corp. survey showed Tuesday. The index has held below 100 since March 2022.

“The pessimism that has dominated for over two years now is still showing no real signs of lifting,” said Matthew Hassan, a senior economist at Westpac. “While cost-of-living pressures are becoming a little less intense and fears of further interest rate rises have eased, consumers are becoming more concerned about where the economy may be headed and what this could mean for jobs.”

Data last week showed Australia’s economic weakness persisted in the three months through June as consumers hunkered down in the face of elevated borrowing costs. The Reserve Bank held rates last month at 4.35% while retaining a hawkish bent given inflation remains stubbornly sticky.

Today’s report showed the unemployment expectations sub-index rose 3.7% to 138.4 in September, up 11% since April.

A key uncertainty for policymakers is how households respond to the tax cuts and energy rebates that kicked in mid-year. Economists expect government spending will strengthen further ahead of a likely 2025 election, complicating the inflation fight.

“We continue to see a sustained improvement in responses on family finances, as inflation moderates and tax cuts and fiscal support measures come into effect,” Hassan said.

Household consumption accounts for more than half of gross domestic product.

The RBA next convenes on Sept. 23-24, with economists and financial markets predicting it will again leave rates on hold.

Other key data points:

• The family finances vs a year ago sub-index rose a further 1.2% in September to be up 13.1% since July, though it remains in “deeply pessimistic territory”

• The family finances, next 12 months sub-index ticked up 0.2% to 97.0, suggesting that most consumers expect the cost-of-living crisis to be largely resolved by this time next year

• The time to buy a major household item sub-index, the component most impacted by the decline in purchasing power over the last two years, was unchanged at 82.6 in September, well below its long run average of 124.2.

• The time to buy a dwelling index rose 6.6% overall to 76.1

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