Consumer confidence in Australia fell by 7% in the month of May after the recent hike in interest rates and the federal budget, according to a survey by Westpac Melbourne Institute. Westpac said that the decline in consumer confidence indicates that the response to the Budget was negative on balance.

Westpac also said that the interest rate hike by the central bank affected the consumer confidence the most. The Westpac Melbourne Institute consumer sentiment index fell 7% in the month of May to 108 index points, while it was reported at 116.1 index points in April. On the other hand, the index was still reported up by 21.6% comparing to the same month last year.

The survey was conducted after the May interest rate rise and the federal budget. The Westpac Melbourne survey also revealed that the confidence of respondents with a mortgage was reported down by 8.1% in the month of May. The average falls were recorded of just 2.3% in response to the previous rate hikes this year. The survey showed that the component of the Index assessing the economic outlook for the next 12 months fell 17.3% in May, while the five year outlook fell 10.6% in the period.