SYDNEY, Oct. 10 (Xinhua) -- Australia saw a slightly improved consumer sentiment in October though it is still pessimistic as worries over further rate rises reemerge.

The Westpac-Melbourne Institute Consumer Sentiment Index edged up 2.9 percent to 82 in October after declines for two straight months, said a survey report released on Tuesday.

However, the reading is still in the deeply pessimistic territory as consumers remain wary of the potential for more rate rises in the months ahead, said the report.

The worries came after the latest statistics showed the country's monthly consumer price index (CPI) surprisingly rose 5.2 percent in the year to August from 4.9 percent in July.

About 63 percent of those surveyed expect mortgage interest rates to rise over the next year, jumping from 52.3 percent in September.

"Some of the increase in this expectation likely relate to the surprise jump in the monthly CPI indicator, which showed annual inflation moving back above 5 percent in August," said Westpac senior economist Matthew Hassan.

Sentiment of family finances improved but was still under pressure due to cost-of-living hikes.

The sub-index of "finances vs a year ago", a particularly important indicator for spending activity, rose 2.7 percent in October to extremely weak level of 63.1. Expectations for finances in the next 12 months went up 2.6 percent from September to 93.9 in October.

The reading "reflects an expectation that cost-of-living pressure will ease as we move to 2024," said Hassan.

The sub-index of Australia's economic outlook for the next 12 months dipped 0.2 percent while that for the next five years rose 2.1 percent.

Labor markets remain a source of support for consumers. The Westpac-Melbourne Institute Unemployment Expectations Index declined 2.7 percent to 127.3 in October, dipping back below the long-run average of 129.

On housing, the "time to buy a dwelling" index posted a 4.8 percent rise to 76 in October, an extremely low level by historical standards. Meanwhile, the Westpac Melbourne Institute House Price Expectations Index rose a further 3.8 percent to 160.4, hitting yet another new cycle high.

Australia is under a more troubling inflation situation with surging fuel prices, a lower Australian dollar and more persistent price rises in the services sector, Hassan said.

The Reserve Bank Board's next meeting on Nov. 7 is set to be very revealing in terms of both how the central bank is reviewing the outlook and how its assessment of the balance of risks may be shifting, Hassan added. Enditem

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