Consumer confidence is getting weaker ahead of the federal budget as a bounce in petrol prices dampens people's enthusiasm to go shopping.
The Westpac/Melbourne Institute index showed consumer sentiment fell by 3.2 per cent in April to 96.2 points, staying below 100 points and indicating there are more pessimists about the economy than optimists.
Westpac chief economist Bill Evans rising petrol prices were partly to blame for causing the gloom.
Petrol pump prices averaged $1.34 a litre in April, a steep climb from the lows of around $1.10 they reached in February following a plunge in global oil prices.
"We partly attributed the eight per cent jump in the confidence index in February to the sharp fall in petrol prices," Mr Evans said.
"We have seen an almost complete retracement of the sharp fall in petrol prices seen earlier this year."
The consumer confidence survey was conducted between April 7 and 12, just after the Reserve Bank surprised some market watchers by holding the cash rate at 2.25 per cent.
Mr Evans said the Reserve Bank's decision against a rate cut, which he expects will come in May, would have also weighed on confidence, along with headlines about sharp falls in iron ore prices and its impact on the federal budget.
Last year's harsh budget that included wide-ranging spending cut plans dealt a big blow to consumer confidence.
Mr Evans said the fact that consumer confidence remains weak ahead of this May's budget was not a good sign.
"We would have preferred to have seen some upward momentum in the index going into the important commonwealth budget," he said.
"We must recognise that confidence is again looking vulnerable."
Four of the five components that make up the consumer confidence index fell in April.
The biggest falls were in the ones that measure confidence in the economic outlook and the health of family finances compared to a year ago.
Australian National Retailers' Association chief executive Anna McPhee said more needed to be done to support household confidence in order to stimulate the economy.
"With the cash rate at historical lows, next month's federal budget must achieve, what was not achieved last year, the difficult balancing act of moving the budget to a more sustainable path without imposing too great a short-term shock on household confidence and spending activity," she said.
Commonwealth Bank senior economist John Peters said there doesn't seem to be any reasons for consumers to be happy.
"The shot in the arm to confidence after the RBA's February rate cut appears to have dissipated, with falls in confidence in both March and April," he said.
While consumers remain gloomy, a National Australia Bank survey released on Tuesday showed a bounce in business confidence.
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