Consumer sentiment rose 7.7 per cent in February from 100.6 to 108.3, according to the latest Westpac-Melbourne Institute index of Consumer Sentiment.

"This is the strongest sentiment reading since December 2010 and is the biggest monthly gain since September 2011,” Westpac’s Chief Economist Bill Evans said.

“The more positive February reading suggests lower interest rates may finally be starting to gain more traction with the consumer.”

Mr Evans said the rise in confidence came despite ‘mixed influences’ this month, with the RBA keeping interest rates unchanged and ‘surprisingly weak retail sales and dwelling approvals.’

Official jobs data in the survey week showed the unemployment rate continuing to hold at 5.4% in January but much of the detail of the report was again soft. 

“Sentiment may have been buoyed by a strong start to the year for financial markets. The ASX rose 4.8% between the January and February and surveys and is up 13.8% from its mid-November low. News from offshore has also been broadly supportive,” Mr Evans said.

“Consumers had more mixed opinions on their finances. The sub-index tracking assessments of "family finances vs a year ago" posted a solid 7.3% rise but remains at a weak overall level while the sub-index tracking forward views on "family finances over the next 12 months" was only marginally higher (+1.4%). Family finances have been a major weak spot for confidence over the last two year with persistently negative readings well below long run averages.”