Consumer confidence has posted its largest monthly fall in more than three years, weighed down by a number of factors including the decline in house prices, global trade wars, and even the Australian men's cricket team.
"The cautiously optimistic consumer mood that prevailed through 2018 has evaporated," Westpac senior economist Matthew Hassan said.
"The continued optimism late last year was something of a surprise, implying the consumer mood was still getting considerable support from low interest rates, diminished fears of rate increases, a firm labour market, and at the margin, lower petrol prices."
Mr Hassan also said that the woes of the national men's cricket team may have also had a negative impact on the mood of consumers, after they lost their first Test series at home to India.
The Westpac/Melbourne Institute consumer sentiment index fell 4.7 per cent in January to 99.6 points, pushing it below 100 points and indicating there are more pessimists about the economy than optimists.
While the post-holiday January reading for the Westpac/Melbourne Institute index tends to be more volatile than other months, Mr Hassan said consumer confidence has had a poor start to the year, down 5.3 per cent compared to the beginning of 2018.
All components of the survey were lower with opinions on the economic outlook for the year weighing the most, followed by confidence in family finances.
Mr Hassan said the poor start to the year for consumer confidence, as well as the disappointing economic growth result in the September quarter will be unsettling for the Reserve Bank when it has its first meeting of the year to decide on interest rate policy.
He said the RBA is likely to lower its economic growth forecasts, but Westpac still expects the central bank to keep the cash rate unchanged throughout 2019 and 2020.