The Westpac consumer sentiment index rose 2.5 per cent in September, but remains downbeat with household financial pressures continuing to weigh on confidence.
Soaring power bills and other hits on the household budget mean consumers remain downbeat despite a better jobs outlook, an economist says.
The latest Westpac-Melbourne Institute Index of consumer sentiment rose 2.5 per cent in September to 97.9 points, from 95.5 in August, but was 3.5 per cent weaker compared with a year ago.
Westpac chief economist Bill Evans says the rising cost of living and worries about a potential interest rate hike have stymied consumer confidence this year.
"Pressures on family finances, concerns around interest rates, deteriorating housing affordability and rising energy prices have all weighed on confidence in 2017," he said.
"These factors are more than offsetting the boost from an improved outlook for jobs particularly when a stronger labour market has not been associated with increased wages growth."
Householders are feeling better about their finances than was the case last month but the rise was from a low base.
The finances versus a year ago sub-index rose 6.1 per cent compared with the August reading, which was a three-year low.
Consumer expectations for finances over the next 12 months fell, with that sub-index dipping 2.1 per cent, reversing all of last month's gain.
Respondents were slightly more positive about whether now was the time to make a major household purchase, with that sub-index rising 2.1 per cent, while time to buy a dwelling measure inched up 0.8 per cent but remained low by historical standards.