Consumer confidence has dropped to its lowest level since August, despite two consecutive cash rate cuts, a survey finds.
The Westpac/Melbourne Institute Index of Consumer Sentiment fell by 8.3 per cent in December from 103.4 in November to 94.7 the following month.
Westpac chief economist Bill Evans said the result was surprising, and notable.
"On face value it should be a surprise that the Index has not risen following a second rate cut from the Reserve Bank (which was eventually passed on in full by the major banks to mortgage borrowers)," he said.
"However the history of previous easing cycles shows that rate cuts do not guarantee an improvement in sentiment.
"The likely explanation is that respondents' concerns over the reasons behind the rate cut may overwhelm the perceived benefits of the cut itself."
Confidence amongst mortgage holders fell by 9.5 per cent, while sentiment dropped 8.3 per cent for people who own their house mortgage free, he said.
Confidence for tenants fell by 3.5 per cent.
Mr Evans said respondents' sentiment seemed to reflect the general concerns about global economic conditions.
"The news on economic conditions, international conditions and Budget and taxation was considered the most negative since 2008/09," he said.
"News on interest rates was the most positive since that period." The index was 14.6 per cent below its level last year."
Westpac expects the RBA to cut rates again when it meets on February 7.
