Consumer confidence is putting a damper on retailers' Christmas spirits, according to an industry body. Consumer sentiment fell in November following the Reserve Bank of Australia's (RBA) surprise interest rate hike earlier in the month.

The Australian National Retailers Association (ANRA) said consumer sentiment paints a lacklustre picture for Christmas retail, with the Westpac-Melbourne Institute Index suggesting the rate rise last week will impact significantly on Australian's Christmas spending.

The Westpac Melbourne Institute Index of Consumer Sentiment fell by 5.3 per cent in November from 117.0 in October to 110.7 in November - a five month low.

The decline followed the RBA's decision on November 2 to lift the cash rate from 4.5 per cent to 4.75 per cent, in defiance of market expectations.

ANRA chief executive Margy Osmond said, "We are pleased to see Westpac agreeing with what retailers have been saying for some time - the consumer sentiment is not matching consumer spending.

"While Australians are confident because they have a job, consumers are choosing to save rather than spend, after taking a hit during the global financial crisis.

"The index suggests more than a third of Australians - about the same number who have mortgages - are planning to spend less on Christmas than they did last year, a blow to the retail community.

"We know from our own surveys of Australians that people are continuing to put off making major purchases, with 27 per cent putting off a large purchase last month.

"Interest rate rises, increased competition from overseas online retailers and consumer conservatism are putting a damper on retailers' Christmas spirits," she said.