Concerns about household finances and job security have consumers at their gloomiest in eight months.
ANZ and Roy Morgan's consumer confidence index fell 2.3 per cent last week, and has been losing ground since the beginning of the year.
Retail spending surged to a five month high in February, but unemployment remains near 12-year highs and ANZ's measure of job ads posted its first fall in almost a year in March.
ANZ chief economist Warren Hogan expects consumer confidence to be bumpy in the year ahead because of these conflicting factors.
"The strength in retail sales over January and February is surprising in light of continuing lacklustre consumer confidence," he said.
"One key driver of the softness in consumer confidence has been weak job security."
CommSec chief economist Craig James said there aren't too many reasons for renewed economic concerns, but a weaker Australian dollar might be a factor weighing on people's minds.
The local currency took its largest weekly fall in two months last week, down one US cent to end the week at 76.32 cents.
It dropped two US cents over the month of March.
"While good for businesses, a weaker Aussie can lead to costlier overseas trips, costlier online purchases and potentially higher prices for a raft of consumer goods," Mr James said.
"Still, the Reserve Bank would be pleased, not disappointed, that the Aussie dollar is easing as it potentially boosts exports and therefore incomes across the economy."
ANZ's survey showed consumers were particularly wary of buying major household items, while confidence in household finances and the economic outlook for the next year were also down.
"A key question for the outlook, therefore, is the extent to which a soft labour market will offset the feel-good factor from higher asset prices," Mr Hogan said.
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