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Bill Evans. Picture: Ben Crabtree/The West Australian.
The West Australian Bill Evans. Picture: Ben Crabtree/The West Australian.

Consumer confidence has slipped to its lowest level since the middle of the year as shoppers grow wary over the plight of the economy.

Westpac's key measure of consumer sentiment slipped by 4.8 per cent this month ahead of the vital Christmas retail period.

Confidence picked up immediately in the wake of the Abbott Government election but over the past two months it has fallen.

Westpac chief economist Bill Evans said two issues - the state of the economy and the lift in housing prices - was starting to weigh on shoppers.

"It appears that the boost in confidence partly associated with the election result and booming house prices has faded in December," he said.

"In particular, confidence around the economic outlook has faltered."

The survey asked respondents issues they could recall over recent weeks.

The state of the budget and taxation, interest rates and employment were all keenly remembered.

"It is likely that news on job losses in high profile companies such as Qantas and Holden may have unnerved respondents while media coverage of rising fixed mortgage rates may also have been a factor in the sharp swing in assessments of interest rate news from favourable to unfavourable," he said.

Four of the five components of the survey were down in December, led by a 9.8 per cent drop in sentiment about the state of the economy over the next 12 months.

There was also a sizeable fall in a question about family finances compared to a year ago while there was also a drop in whether it is a good time to buy a major household item.

Coalition voters remain much more optimistic than their Labor voting counterparts but confidence amongst both groups fell through the month.

Mr Evans, who believes the Reserve Bank will have to cut interest rates again to help the economy and take pressure off the Australian dollar, said it was clear the economy needed help.

The lift in housing prices was also weighing on shoppers.

"The messages from this survey are that a potential drop-off in housing demand due to affordability issues might slow the current surge in prices, while the other issues around the labour market are unlikely to disappear," he said.