Consumer confidence rebounded sharply over the December quarter, signalling a bumper Christmas for retailers, according to the latest Westpac McDermott Miller survey.
The bank said the Westpac McDermott Miller Consumer Confidence Index rose 4.7 points to 110.7 in the December quarter following sharp declines earlier in the year.
The improvement over the quarter returns the index to around average levels, Westpac said.
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"What stands out is that households' appetite to spend has increased, and low interest rates are clearly playing a role," said Westpac senior economist Satish Ranchhod said in a commentary.
"Combined with an improved outlook for the coming year and low inflation, low borrowing costs are making it very attractive for consumers to purchase big ticket items like home furnishings.
"This signals a bumper Christmas season for many retailers," he said.
But Ranchhod cautioned that households needed to be careful with their spending over the festive period.
"Low interest rates mean that many households are currently less concerned about paying down debt," he said. "But growth is set to slow over the coming year and unemployment is likely to increase," he said.
See more from the latest Consumer Confidence Index here: