Australia’s devastating bushfires have caused consumer confidence to fall in January – another sign of an economy with lacklustre spending.

The monthly Westpac-Melbourne Institute consumer sentiment index fell 1.8 per cent to 93.4 points, remaining below the 100-point neutral mark.

Westpac chief economist Bill Evans said it was somewhat surprising the fall was not more dramatic, given the 5.8 per cent drop which occurred during the Queensland floods in 2011.

However the index in 2020 had been substantially lower than in 2011, which reduced the drop, according to Mr Evans.

The 93.4 points result is 6.2 per cent below the level a year ago.

“This low level of confidence is consistent with the generally lack lustre reports on consumer spending,” Mr Evans said.

All the economic components of the index recorded declines in January.

Confidence in economic conditions for the next 12 months and next five years fell by 5.4 and 3.7 per cent respectively.

However Australians are more optimistic about buying a home.

This sub-index gained 5.7 per cent, which reversed the decline of 5.6 per cent in December.

This sub-index is 3.4 per cent (118.8 points) higher than a year ago, which the report authors said indicated buying conditions in the housing market were more favourable.

The survey of 1,200 adults was conducted by phone interviews.