Consumer confidence continues to drop falling to the lowest level since June last year as a result of fears of rising household costs.

The Westpac-Melbourne Institute index of consumer sentiment fell by 2.4 per cent in March from 106.6 in February to 104.1 in March.

Westpac's chief economist Bill Evans said the weak results is because of the of the three consecutive rate hikes by the Reserve Bank.

“The key factors behind this weak result appear to be concerns over budget and tax issues and petrol prices,” he said.

According to the survey, households are particularly negative on the outlook for family finances over the next 12 months.

“That component fell by 6.8 per cent with pessimists outnumbering optimists for the first time since March 2009 when fears that Australia was in recession were widespread,” he said.

Spending intentions also deteriorated in the survey.

However, the outlook for economic conditions over the next 12 months improved by 5.7 per cent although the five year outlook fell by 2.9 per cent

“Evidence from this report that Consumer Sentiment is at its lowest level since June 2010 and households are particularly concerned about their own finances enforces the theme of a cautious consumer,” Evans said.

“There is little chance of a rate move in April with the next increase not likely to occur before the September quarter.”