Australian consumer confidence has dropped 4.1 per cent this month despite the Reserve Bank lowering the cash rate and a fall in unemployment.
It is the second time in three months that consumer confidence has fallen following a cut to the cash rate, which suggests the rate cuts raise concerns over the state of the economy.
Westpac economist Matthew Hassan says the RBA would have been hoping for a better result after lowering its cash rate to 3 per cent earlier this month.
"[It's] a very disappointing result despite the RBA's latest moves on interest rates," Mr Hassan said.
"Consumer sentiment gave up most of the gain we had seen in the previous month.
"(The Reserve Bank) will be a little bit concerned that the December result was a bit weaker, and I think especially given yesterday's poor results on business confidence, it will add to their concern that the wished-for strengthening in the non-mining parts of the economy is not quite on track at this stage." Mr Hassan said a poor economic outlook was filtering through to the labour market, making workers doubt their job security.
He also said it was a worrying sign for retailers.
"It's not good reading a month or a few weeks out from Christmas," he said.
"It does suggest that consumers aren't looking to spend up in a big way; it does suggest that we are going to see a similar Christmas sales season to last year." However, there was one bright spot - an increase in the number of people who thought now was a good time to buy property, he said.
Westpac analysts say a perceived slowdown in the economy and rising fear of unemployment is what is weighing on shoppers' minds.
The result follows yesterday's survey which showed a .