Australian consumer sentiment has slumped to one of its weakest levels in decades, weighed down by surging fuel prices, higher mortgage rates, and mounting cost-of-living pressures, according to a survey by Westpac and the Melbourne Institute published Tuesday.

The Westpac-Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4 in October from 84.4 in September.

Consumer sentiment remains weighed down by the cost of living and high interest rates, with pessimists outnumbering optimists in 102 of 106 groups as fuel prices surge and the Reserve Bank of Australia (RBA) cash rate hits 4.6%, said Matthew Hassan, head of Australian macro-forecasting at Westpac.

The RBA's latest rate hike has sharply weakened consumer confidence, with sentiment plunging nearly 20% among those surveyed after the decision.

The October decline in consumer sentiment was broad-based, with the biggest pull-backs seen in assessments of family finances and whether it was a good time to buy major household items.

Consumer views of the economic outlook weakened slightly, with the 12-month index falling 1.6% to 78.3 and the five-year index edging down 0.4% to 85.5, near August 2020 lows.

Consumers are bracing for further mortgage rate hikes, with more than 80% now expecting borrowing costs to rise over the next year as rate fears surge to near-cycle highs.

Australians are growing more concerned about job security, with unemployment expectations rising further in October as consumers remain increasingly "on edge" about the labor market.

Australian homebuyer sentiment improved in October despite the RBA's rate hike, with the "time to buy a dwelling" index rising 3.4% to 88.4, although pessimism still dominates.

The RBA is likely to raise interest rates again in November as rising fuel costs broaden inflation pressures and the artificial intelligence-driven data center boom adds to demand despite deepening consumer pessimism, per the report.