The Westpac-Melbourne Institute Index of Consumer Sentiment rose 1.9 per cent in February to 106.6.
A reading above 100 shows optimists outweigh pessimists.
The lift in consumer sentiment followed a 5.7 per cent fall in the index in January.
Westpac senior economist Bill Evans said much of the January fall was in response to the floods.
"The survey in January was conducted over the week when the floods in Brisbane and regional Queensland dominated the news," Mr Evans said.
"The fall in January was not just a negative response in Queensland, since excluding Queensland the Index was still down by 3.2 per cent."
Mr Evans said the rebound in February could have been stronger if Cyclone Yasi in north Queensland had not occurred.
"On balance, other factors which normally affect the index were positive," Mr Evans said.
"The Reserve Bank did not decide to raise interest rates at its Board meeting on February 1 and the unemployment rate fell to 5 per cent."
Four of the five components of the consumer sentiment index increased in February.
The index measuring assessments of family finances fell 4.4 per cent from January and was the only component below 100.00.
The index, measuring expectations for finances over the next 12 months, rose 1.4 per cent.
The outlook for economic conditions over the next 12 months rose by 1.1 per cent, whereas the five-year outlook was up by 10.2 per cent.
The index of whether it is a good time to buy a major household item was up by 0.8 per cent.
"In effect, households are saying that because of low prices, now is a good time to buy, but due to caution surrounding the economic outlook, they are not buying," Mr Evans said.
JP Morgan economist Helen Kevans said the Queensland floods had failed to have a lasting impact on consumer confidence.
"We thought that consumers would be less upbeat this month, but the negative impact of the recent floods in Queensland failed to have a lasting impact on confidence," she said.
"Another factor we thought would have put a dent in confidence was the announcement of the proposed flood levy, which is being debated in parliament this week."
Ms Kevans said rising day-to-day living costs will also curb spending.
"The anticipated jump in food, fuel and electricity prices will eat further into households' disposable incomes, which already have shrunk owing to higher mortgage repayments," she said.
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