Consumer sentiment is at its lowest point in decades, according to key survey

Both the Westpac-Melbourne Institute Consumer Sentiment Index and the ANZ-Roy Morgan Australian Consumer Confidence Rating show families have rarely been gloomier about the state of the economy and their own finances, holding out the prospect the Reserve Bank of Australia may soon begin to see evidence of the slow down in household spending that it has been seeking to engineer.

The Westpac-Melbourne Institute measure held steady at an "extremely weak" 78.5 points for a second month while the ANZ-Roy Morgan survey fell to 2.9 points to 77 points, its lowest mark since the early stages of the pandemic in April 2020.

Westpac chief economist Bill Evans said back-to-back sub-80 point readings were very rare.

"Runs of sub-80s reads have only been seen during the late 1980s-early 1990s recession and in the 'banana republic' period ... in 1986 when the Australian dollar was in free-fall after the federal government lost its triple-A rating," Mr Evans said.

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The component of the index measuring whether now was the time to buy a major household item is particularly grim.

It has tumbled a cumulative 14 per cent in the past two months to 74.9 points.

Mr Evans said, apart from two brief dips during the global financial crisis, this was the lowest such reading in the history of the survey, which began in 1974.

"[This is] weaker than the poorest reads during the recessions of the mid-1970s, the early 1980s and the early 1990s," the Westpac economist said.

Renters, many of whom have experienced double-digit in accommodation costs, are particularly pessimistic.

The measure of the state of their finances compared to a year earlier plunged 14.7 per cent to a "dire" 56.9 points, contributing to a reading among all households that was lower than at any time since the depths of the early 1990s recession.

Consumers responding to the ANZ-Roy Morgan survey were similarly despondent about their current finances. The index measuring this dropped to 66.3 points early this month - its lowest reading since 2001 and far below the long-term average of 102 points.

The results suggest the Reserve Bank may be gaining traction in its efforts to ease inflation by lowering demand pressures in the economy.

But a separate survey of business conditions by National Australia Bank could help convince the central bank that it has more work to do.

The survey, undertaken before the latest rate hike, found although confidence among firms has taken a pessimistic turn, business conditions are firm.

Although the measure of conditions has eased since late last year, it remains at a high 17 points - well above the long-term average of 6 points, underpinned by good trading, profitability, forward orders and employment.

"Business conditions remained at a very high level in the history of the survey," NAB chief economist Alan Oster said. "The survey confirms the ongoing resilience of the economy through the first months of 2023."

The Reserve Bank is widely tipped to deliver a further 0.25 of a percentage point rate hike in April, taking the official cash rate to 3.85 per cent.

But Mr Evans said RBA governor Philip Lowe last week raised the possibility of a rate pause, possibly as soon as next month.

The Westpac economist said forthcoming data on employment, inflation, spending and consumer confidence would shape the likelihood of an April hike.

Either way, "we will maintain our forecast of an increase in May," Mr Evans said.

Markets expect 3.85 per cent to be the peak of the current rate hike cycle, but ANZ economists predict the cash rate will reach 4.1 per cent in May.