Consumer sentiment has taken a battering in May, with the lowest reading of the Westpac Melbourne Institute Index of Consumer Sentiment falling by 7 per cent over the last month.

Westpac’s Chief Economist, Bill Evans, said that the report found that sentiment fell from 104.9 points in April to 97.6 in May.

"This print pushes the Index back into a range where pessimists outnumber optimists for the first time since October 2012. It is the lowest read since August 2012. Over the last 2 months the Index has fallen by 11.7% to fully reverse the promising 9.0% increase we saw in February and March,” Mr Evans said.

The results come as a bit of a shock says Mr Evans, with the Reserve Bank’s decision to cut the official cash rate by 0.25 per cent driving expectation of a hike in consumer confidence.

“However, since the rate cut we have seen the announcement of the Federal Budget,” Mr Evans said.

“We expect that the dissatisfaction is not only due to concerns around some of the savings measures in the Budget but also the sharp deterioration in the fiscal position, indicating renewed fears about the overall state of the economy. These concerns are also likely to have been fuelled by the surprise fall in the Australian dollar before and during the survey period. We will have further evidence around this issue with tomorrow's release of the Westpac Melbourne Institute Index of Unemployment Expectations.