Consumer confidence has slumped amid concerns over global tensions, lower share prices and higher unemployment.
The weekly ANZ-Roy Morgan consumer confidence index fell sharply, moving to 108.5, in the week ending August 10, from 115.0 the previous week.
The move, the second weekly fall in a row, takes it well into below-average territory.
The average since 1990, a period which includes a fully-fledged recession and several lesser economic shocks including the global financial crisis, is 113.2.
The index fell steeply in May, dipping below 100 after the poorly received federal budget, but had since recovered.
The moves over the past fortnight have now handed back almost exactly half that bounce.
ANZ economists Warren Hogan and Katie Hill put the latest relapse down to three causes.
"This may reflect concerns related to the unexpected spike in the reported unemployment rate (from 6.0 per cent to 6.4 per cent), a fall in the Australian sharemarket and geopolitical tensions surrounding Iraq and the Ukraine," they said in a report issued with the data on Tuesday.
The main reasons for the latest decline in confidence were gloomier responses to survey questions about expected economic conditions both one and five years ahead, and whether it was a good time to buy a major household item.
The ANZ economists said they still expected moderate growth in consumer spending in 2014 ahead of a faster pace in 2015, supported by rising house prices and better conditions in the job market.
"However, the trajectory of consumer confidence remains key for the recovery in consumer spending and we will closely monitor developments," they said.
Recent figures from the Australian Bureau of Statistics showed a pickup in retail sales in June, but against the background of a much slower growth trend so far in 2014 compared with the second half of 2013.
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