A recent survey, conducted after the Reserve Bank of Australia (RBA) announced a 25-basis-point interest rate rise in a row, showed the Westpac-Melbourne Institute Index of Consumer Sentiment dipping 3.8 percent to 113.8 points in December.

The December plunge in the consumer sentiment index followed an earlier fall in November to 118.3 points.

While all the components of the overall sentiment index weakened in December, the biggest plunges comprised 7.2 percent fall in projected economic conditions in the coming year; 6 percent in family finances over the next 12-month period; and 4.9 percent in expectations.

Noting that the RBA’s interest rate increase of 25 basis points in December followed similar moves in October and November, Westpac chief economist Bill Evans said on Wednesday that, in the given scenario, the recent plunge in the index was “surprisingly modest.”

Citing earlier examples, Evans added: “Note that after the RBA tightened by 25 basis points in March 2005, the variable mortgage rate was increased to 7.3 percent and the index fell by a massive 15.5 percent. Each subsequent increase in mortgage rates over the course of 2006 and 2007 generally saw ‘double-digit’ falls in the index.”

Evans further added that the survey got a more negative response, nearly 8.9 percent, from those consumers who had taken a home loan, vis-à-vis a 4.1 percent fall in the confidence of those who owned a home.