The Abbott government insists its second budget will be reasonable, but shoppers are still to be convinced after last year's experience.
Consumer confidence has fallen again in the past week as the build-up to Treasurer Joe Hockey's May 12 budget intensifies.
The ANZ-Roy Morgan confidence gauge fell 0.9 per cent to a fresh eight-month low and stands well below its monthly average stretching back to 1990.
"Negative headlines around the worsening budget position could continue to have an impact on confidence," ANZ chief economist Warren Hogan said on Tuesday.
Mr Hockey has the support of Reserve Bank governor Glenn Stevens in pursuing a more gradual approach to his budget repair task, amid declining revenue from falling commodity prices and slow wages growth.
"The government has little choice but to accept the slower path of deficit reduction over the near term," he told an audience in New York.
But over the longer term "hard thinking" was still needed to address the persistent gap between the government's permanent income via taxes and its permanent spending on the provision of goods and services.
Confidence could receive a lift ahead of the budget when the central bank holds its monthly board meeting on May 5.
Mr Stevens has indicated a further reduction in interest rates is "on the table", while saying any help to boost sustainable growth from other policies would be welcome.
Commonwealth Securities chief economist Craig James says politics can play a big role, including more bipartisan support for key fiscal measures including the budget.
"No doubt the Reserve Bank governor wants to see Aussies coming away from the federal budget feeling more chipper," Mr James said.
Price pressures are unlikely to stand in the way of a cut in the cash rate to an all-time low of two percent from 2.25 per cent.
Economists expect Wednesday's consumer price index for the March quarter will ease to an annual rate of just 1.3 per cent.
It would be the slowest inflation rate in nearly three years and comfortably below the RBA's two to three per cent target band.
Share
