A widely accepted indicates of consumer confidence has recorded a fall of 4.1 per cent in December compared to a growth of 5.2 per cent recorded during the month of November.

The Westpac-Melbourne Institute consumer sentiment index, which was released on Wednesday, fell 4.1 per cent in December. The fall was shocking because it came even after central bank announced a interest rate cut and unemployment rate fell to 5.2 per cent. The index was recorded at 100 points indicating that the pessimism and optimism was equally matched during the month.

Westpac chief economist Bill Evans described the fall as very surprising as many believed that the sentiment had began responding to the rate cuts by the central bank in the country. The Reserve Bank of Australia (RBA) has reduced the cash rate by 175 basis points since November 2011.

"The Reserve Bank has two more months to assess the impact of its interest rate moves before its next meeting. Evidence to date is that low interests are not generating much traction with households," Mr. Evans said.

The latest figures were released soon after the National Australia Bank monthly business survey for November showed that the confidence has fallen to its lowest level since April
2009.