Australian consumers were modestly more optimistic in May, but still somewhat gloomy, reported Westpac Economics on Tuesday.

The Westpac-Melbourne Institute Consumer Sentiment Index rose 2.2% to 92.1 in May, from 90.1 in April, but still logged in the "firmly pessimistic territory overall," added Westpac Economics, an arm the Westpac Banking.

An index level of 100 on the consumer sentiment index indicates neutral mood, while above points to optimism and below to pessimism.

The "family finances vs. a year ago" consumer sub-index logged at 75.1 in May, up 7% from April, though still deep in negative territory, noted Westpac.

Australian consumer outlooks dimmed, but still clung to modest optimism in May, according to survey results.

Consumers were less convinced about the outlook for their finances. Indeed, the 'family finances, next 12 months' was the only sub-index to deteriorate in May, dipping 0.8% to 100.7," reported Westpac. "While that still leaves the sub-index in optimistic territory, expectations have moved from cautiously optimistic a few months ago to just above neutral, falling 7% in the last two months alone."

The Australian consumer sub-index in May for "economic conditions next 12 months" rose to 93.2, up from 90.0 in April, but remained in the pessimistic zone, noted Westpac.

Consumers were chary about house-buying prospects in May. The "time to buy a dwelling" sub-index did rise 5.1% to 90, but "pessimists still outnumbered optimists," noted Westpac.

The Reserve Bank of Australia next meets in a policy session from May 19-20, noted Westpac. Given somber consumer sentiments and moderating rates of inflation in the nation, the central bank may usher in another rate cut, said Westpac.

"Westpac expects the (RBA) board to cut the cash rate by another 25 basis points to 3.85%," said Westpac. "Current (RBA) policy settings are still weighing on the consumer, as shown by both pessimistic sentiment reads and slow growth in spending."

Easing by the RBA is thus justified and likely, said Westpac.

The Westpac May consumer survey was based on responses from 1200 adults aged 18 years and over, across Australia, received from May 5 through May 9.