Retailers may be about to enjoy a renewed burst of consumer spending.
New data shows consumer confidence has soared to its highest level in more than two years as the Reserve Bank of Australia's (RBA) interest rate cuts since late 2011 finally appear to be making their mark.
Rising share markets and house prices, as well as a vast improvement in the global economy since the turn of the year, were also seen aiding a 7.7 per cent jump in consumer sentiment in February.
The data coincided with the Australian share market closing at its highest level in over four years.
"The pick-up in consumer confidence should provide a degree of support for retail activity," Commonwealth Securities economist Savanth Sebastian said in a client note.
The Westpac-Melbourne Institute index of consumer sentiment rose to 108.3 in February, from 100.6 in the previous month, comfortably above the 100-mark that indicates there are more optimists than pessimists.
Consumers were particularly upbeat about the economic outlook, with expectations for conditions over the next 12 months surging 14.7 per cent in February, and 10.8 per cent for the next five years.
National Australia Bank (NAB) senior economist David de Garis agreed the report was a hint that consumer spending had started 2013 in better shape than in the second half of last year, although "intentions are one thing and spending is another".
"We still see the economy as underperforming this year, with weak levels of residential construction, non-mining investment and flat employment as underscoring the need for more monetary stimulus," Mr de Garis said.
Westpac chief economist Bill Evans said the improvement in confidence would need to be sustained to ensure non-mining sectors of the economy were strengthening enough to counteract the downturn in mining investment that would begin in the second half of 2013.
"Without businesses supporting the economy by lifting investment and employment plans, consumer optimism could quickly fade," he said.
Mr Evans still expects the RBA to cut the cash rate by 25 basis points to an all-time low of 2.75 per cent when its board meets in March.
"Today's report will be an important input to policy deliberations, but should not divert the board from other evidence around the economy's momentum and prospects."
Still, the sharemarket's key indices breached the 5000 point mark for the first time since the 2008-2009 global financial crisis.
A record half-yearly profit of $3.7 billion from the Commonwealth Bank of Australia helped to lift the overall market.
However, the Australian Greens have accused the CBA of making excessive profits at the expense of its customers.
Deputy Greens leader Adam Bandt said the CBA and other big banks were gouging customers with unjustified fees and interest rates out of sync with real costs.
He wants the big four banks - CBA, ANZ Bank, NAB and Westpac - to scrap ATM fees and require them to provide "tracker mortgages" that match the real cost of funding.
