Consumer confidence has taken a surprising tumble in December.

The Westpac Melbourne Institute Index of Consumer Sentiment fell by 4.1 per cent to 100 in December from 104.3 in November.

Westpac's chief economist Bill Evans said the results are very surprising.

“When we saw the 5.2 per cent increase in the Index in November, which came despite the Reserve Bank surprising by holding rates steady, it appeared that sentiment was finally starting to respond to the accumulated series of rate cuts since November last year,” he said.

“With that in mind it was therefore reasonable to expect that the Index would respond quite positively to the rate cut the Reserve Bank delivered last week.”

The Index is now back down to levels that was seen in October and is now 3.2 per cent below its November 2011 level.

The survey revealed the major news categories which influenced respondents and how each category was assessed. The news items which had the largest impact were around economic conditions. An impressive 60 per cent of respondents recalled news items on the economy. Next most prominent were interest rates (28.9 per cent of respondents); budget and taxation (20.7 per cent); international economic conditions (20.6 per cent); inflation (13.9 per cent); and employment (11.9 per cent).

“Despite another rate cut and improving sentiment towards housing, consumers remain cautious and particularly concerned around the outlook for the economy and for employment,” Evans said.

“The Reserve Bank has two more months to assess the impact of its interest rate moves before its next meeting. Evidence to date is that low rates are not generating much traction with households. Hence there is likely to be a decision to further ease rates in February or March.”