Consumer confidence fell 4.7 per cent in October to 80.4, and among Australians surveyed after last week's interest rate rise it dropped to 67.2, according to the Westpac-Melbourne Institute index released on Tuesday. Westpac said that post-decision reading has only been recorded for a complete survey "during the depths of the early 1990s recession".

The survey of 1,200 adults ran from 28 September to 1 October, straddling the Reserve Bank's decision on 29 September to lift the cash rate by 25 basis points to 4.60 per cent. The 60 per cent interviewed before the announcement gave a reading of 86.9. The 40 per cent interviewed afterwards gave 67.2. Westpac said the gap of nearly 20 per cent was the largest since it began tracking daily responses in 2019.

Any reading below 100 means pessimists outnumber optimists. The index is 12.7 per cent lower than a year ago and well below its long-run average of 100.2. Pessimists outnumbered optimists in 102 of the 106 demographic groups Westpac tracks.

The pressure is coming from two directions. Westpac said average pump prices were back above $2.30 a litre nationally, up nearly 25 per cent since January. The Reserve Bank's own statement said higher fuel prices had "partially been passed through to prices of other goods and services". Annual CPI inflation was 4.0 per cent in August, and unemployment rose to 4.6 per cent the same month, according to the Australian Bureau of Statistics.

Households reported the damage directly. The measure of family finances compared with a year ago fell 8 per cent to 66.9, matching April's low. Westpac said the sharpest falls were among women, retirees and owners of investment property. The "time to buy a major household item" measure fell 7.1 per cent to 83, about 40 points below its long-run average.

Borrowers expect worse. The mortgage rate expectations index rose 5.5 per cent to 179.7, close to May's peak. Just over 80 per cent of people surveyed after the decision expect mortgage rates to rise in the next 12 months, up from 63 per cent last month. Among mortgage holders the figure was close to 90 per cent, and more than 40 per cent expect rates to rise by more than a full percentage point.

“Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight," said Matthew Hassan, Westpac's head of Australian macro-forecasting. "The latest RBA move looks to have badly rattled consumers.”

Westpac also carries its own forecast in the release. It said 4.6 per cent was the highest cash rate since 2011 and that standard variable mortgage rates were set to push above 9 per cent for the first time since 2008. Hassan said a further rise at the November meeting was likely. Westpac is a mortgage lender, and those standard variable rates are the ones its customers pay.

Housing expectations ran the other way. Westpac's house price expectations index rose 4.3 per cent to 115.1, though it was 121 among people surveyed before the decision and 103 among those surveyed after it.

The Reserve Bank board said it would raise rates further "if needed" to bring inflation back to target. It next meets on 2 and 3 November, and the next inflation and jobs figures arrive before then.