Australian consumer sentiment improved in March, lifted by better household finances, a perception of an improved job market, and cooling inflation, reported Westpac Economics, an arm of the Australian bank, on Tuesday.

The Westpac-Melbourne Institute Consumer Sentiment Index rose to 95.9 in March from 92.2 in February, and up from 78.5 a year earlier, reported Westpac.

The nation's Sentiment Index neared 100 in March, indicating consumers are becoming less negative. "At 95.9, the Consumer Sentiment Index is now at a three-year high and just 4% off the 'neutral' level of 100, where there are the same number of optimists as pessimists," said Westpac.

Australians have been becoming more economically confident since the latter half of 2024, but consumer mood recently hit some hiccups. "The recovery in consumer sentiment, which began in the second half of last year but lost its way a little over the Christmas-New Year period, regained momentum in March," added Westpac.

In March, Australian consumers were optimistic regarding household budgets in the 12 months ahead. The subindex for "family finances in next 12 months" inclined to 108.3 in March, up from 105.0 in February and up from 85.3 a year earlier.

However, Australians were still pessimistic regarding the current picture, with the "family finances vs. a year ago subindex" striking 76.7 in March, which was better than 75.1 reading of February, but still in the negative zone.

Recent easing of inflation rates in Australia, and rate cuts by the Reserve Bank of Australia (RBA), the nation's central bank, are lifting sentiment also, said Westpac. "The RBA's decision to cut interest rates in February and a further easing in cost-of-living pressures have provided a clear lift," said the bank.

Australian expect house prices to go up, but not think March is a good time to buy a home. The "house price expectations" subindex struck 146.5 in March, up from 142.3 in February and 111.7 a year earlier.

But the "time to buy a dwelling" subindex logged at 91.6 in March, well below its long term average of 1200, reported Westpac.