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SYDNEY, May 11 (Reuters) - A measure of Australian consumer sentiment jumped in May as expectations for economic conditions and family finances improved markedly after last week's cut in interest rates to all-time lows.
The survey of 1,200 people by the Melbourne Institute and Westpac Bank WBC.AX showed its index of consumer sentiment climbed 8.5 percent in May, from April.
That left the index 0.8 percent higher versus May last year at 103.2, meaning optimists outnumbered pessimists. The index was at its highest since January 2014.
The survey was conducted in the week when the Reserve Bank of Australia cut the official cash rate by 25 basis points to 1.75 percent. That same week, the government unveiled a budget that contained modest income tax cuts for some people.
"Our analysis indicates that the dominant driver of the boost to confidence has been the rate cut," said Bill Evans, chief economist at Westpac.
"Supporting this view has been a stunning 15 percent increase in the confidence of those respondents in the survey who currently have a mortgage."
Expectations for the economic outlook over the next 12 months jumped 13.2 percent, while the outlook for the next five years surged 14.8 percent.
The index of family finances compared to a year ago climbed 3.2 percent in the month, while the outlook for the 12 months ahead rose 7.2 percent.
In an encouraging sign for retailers, the index for this being a good time to buy major household items rose 4.9 percent.