For the first time since the global financial crisis, consumers have kicked off the new year on a pessimistic note.
The ANZ-Roy Morgan consumer confidence index fell 0.9 per cent in the week ending January 31, and has fallen 4.4 per cent over the past four weeks.
Confidence was 2.1 per cent lower in January compared to December, the first negative start to the year since 2008.
"Confidence is now below the long-run average level and has reversed much of the `Turnbull rally' from last year," ANZ chief economist Warren Hogan said.
He said losses on financial markets and concerns about global growth appear to be behind the result.
"The weakness in confidence highlights the powerful links between international instability and the domestic economy," Mr Hogan said.
"The Reserve Bank board will take note of these international concerns despite solid domestic economic momentum."
ANZ predicts the RBA will leave rates on hold at the record low of two per cent at it's February board meeting on Tuesday.
"Over time, we expect the case for a further modest interest rate cut will build and the cash rate will fall another 50 basis points by the end of 2016," Mr Hogan said.
CommSec economist Savanth Sebastian said the weaker Australian dollar also dampened confidence last week.
"In addition, the media discussion of a lift in the GST would have played a part," he said.
But Mr Sebastian said overall confidence remains healthy, with sentiment still in line with the two-year average.
"Importantly, household budgets are looking more attractive," he said.
"Lower interest rates, a lack of inflation and the ongoing slide in petrol prices (are) freeing up a few more dollars."
Last week's overall result was dragged down by a decline in consumers' views towards their personal finances, a measure most correlated with household spending.
The subindex on respondents' financial situation compared to a year ago fell 2.9 per cent, and people's view of their finances in the next 12 months fell 2.3 per cent.
But these levels remain above their long-run averages, the survey found.
"Interestingly, the estimate of family finances over the next year may have eased from the highest levels in two years over the past week, but still remains upbeat," Mr James said.
And confidence about the economic outlook bounced back.
The subindex on economic conditions in the next 12 months rose 2.3 per cent following falls totalling 13.5 per cent since the beginning of December.
