(Bloomberg) -- Australia’s consumer confidence declined in December as persistent inflation and elevated interest rates at home coupled with upheaval abroad increased household uncertainty over the outlook for the economy.

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Sentiment fell 2% from the prior month to 92.8 points, a Westpac Banking Corp. survey showed Tuesday. While the consumer mood has improved markedly over the year it still remains gloomy, with 100 points the dividing line between pessimism and optimism.

There has been “a loss of confidence around the outlook, particularly for the economy,” said Matthew Hassan, a senior economist at Westpac. “That likely reflects several factors including: a disappointing September quarter national accounts update; ongoing uncertainty around inflation and the potential for interest rate easing; and a more unsettled global backdrop.”

Household sentiment has been in the doldrums in the post-pandemic period as a surge in inflation prompted the Reserve Bank to raise rates to 4.35%, where they have remained for the whole of this year. That has weighed heavily on the private sector, with the economy barely expanding in the second and third quarters and the property market losing steam.

“Consumer sentiment towards housing deteriorated in December, with homebuyer sentiment falling back to very pessimistic levels and price expectations continuing to soften,” Hassan said. The time to buy a dwelling index fell 6% to 81.6.

The survey was carried over the week ending Dec. 13, meaning it captured the RBA’s meeting last week when it signaled increased confidence that inflation is coming under control, and Thursday’s surprise fall in unemployment to 3.9%.

“The biggest pull-back was around expectations for the economy,” Hassan said. “The economic outlook, next 12 months sub-index dropped 9.6% to 91.2, while the economic outlook, next 5 years sub-index fell 7.9% to 95.9. Both sub-indexes unwound about half of the rally seen over the previous two months.”

Other key data points: 

• The time to buy a major household item sub-index registered a significant improvement in December, rising 4.8% to 89.2, a 2-1/2 year high
• The Westpac–Melbourne Institute Unemployment Expectations Index rose 2.7% to 123.7 in December (a higher reading means more consumers expect unemployment to rise over the year ahead)
• Updates on the wisest place for savings questions, run every three months, showed consumers remain very risk averse about financial decisions

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