The rising Australian dollar may be sapping consumer confidence.
The Westpac/Melbourne Institute index of consumer sentiment plunged 4.0 per cent in April to 95.1 points, which indicates there are more pessimists about the economy than optimists.
It follows a fall of 2.2 per cent in March and puts the confidence index 1.1 per cent lower than it was a year ago.
Westpac chief economist Bill Evans said the latest reading was particularly disappointing because there had been hopes the previous month's fall was a blip.
The standout development likely to be sapping confidence was a solid rise in the Australian dollar, which hit a nine-month high above 77 US cents more than once during March.
"Given that rebalancing of the economy towards service exports tourism and education in particular has been an important positive development over the last two years, respondents may now be interpreting any increase in the Australian dollar as adverse for future growth," Mr Evans said.
AMP chief economist Shane Oliver said depressed consumer sentiment could impact economic growth.
"The risk being that if consumer confidence does not improve it will eventually drag down business confidence to the extent that spending in the economy will be affected," he warned.
The survey highlighted increasing pessimism about household budgets, with respondents' confidence in their family finances down 3.8 per cent from a year ago, and expectations for their family finances over the next 12 months 6.6 per cent weaker.
Consumers were also 5.5 per cent less optimistic about economic conditions over the next 12 months, and 5.9 per cent less optimistic about the next five years.
Commonwealth Bank director of economics John Peters said the federal budget could also be weighing on confidence.
"The government's ongoing warnings about the nation's and the government's need to live within their means is unlikely to be calming music to consumer ears," he said.
Prospects for the housing market were also on the decline, with the Westpac/Melbourne Institute Time To Buy a Dwelling Index plunging 9.2 per cent to 95.1 points in April, from 104.7 points in March.
However, the Index of Unemployment Expectations fell 1.8 per cent, indicating respondents were more confident the jobless rate would fall.
