Threats of the first double dissolution election in almost 30 years are rattling consumers.
The ANZ-Roy Morgan consumer confidence index fell 1.3 per cent in the week ending March 27, with levels edging lower in the past fortnight following recent highs.
Prime Minister Malcolm Turnbull's move to bring the budget forward as part of a likely early election on July 2 was behind the slump, the survey shows.
ANZ's head of Australian economics, Felicity Emmett, says greater uncertainty in the lead-up to an election can weigh on confidence, and Australia hasn't had a double dissolution election since 1987.
"Moreover, the government's decision to bring forward the Commonwealth budget is likely to put the issue of strained public finances firmly at the front of consumers' minds," she said.
Overall sentiment was dragged down by views about the 12-month economic outlook, which dropped 5 per cent.
And while respondents' views towards the economic outlook have picked up in the past six weeks, they remain well below their long-run average, the report showed.
Meanwhile, consumers' perceptions of their current finances dipped 4.1 per cent.
CommSec chief economist Craig James says consumers had a bad week, with politics dominating the airwaves and the local currency dipping 1.5 US cents.
"Still, Aussies are still more confident than a year ago and positive on their future finances and the longer-term outlook for the economy," he said.
Respondents' views towards the economic outlook in the next five years rose 2.3 per cent, and views of future finances edged 0.6 per cent higher.
ANZ said consumers' opinions about their personal finances have been on an upward trend since October.
Mr James said conditions for consumers are good, with inflation and petrol prices low, interest rates stable and the jobless rate easing.
