Consumers were particularly upbeat about their personal finances, the weekly survey from ANZ and Roy Morgan revealed.
A confidence boost at the start of a new year is not unusual, though ANZ economist Madeline Dunk said last week's result was among the top three since 2023.
Higher interest rates and cost-of-living pain have been weighing on consumer sentiment but the darkest days appear to be over, with the confidence gauge trending higher from the lows of 2023.
Consumer confidence is rising on the back of tax cuts and potential interest rate cuts. (Bianca De Marchi/AAP PHOTOS)
"We expect the upward momentum to continue through 2025, as tax cuts, rising real wages and eventually rate cuts support household disposable incomes," Ms Dunk said.
Prime Minister Anthony Albanese has been out spruiking his government's efforts to support struggling households in a pre-election media blitz.
"At each and every opportunity, we've looked for ways to address cost-of-living, to address those pressures that are on families," he told Seven's Sunrise.
Consumers are expected to open their wallets when interest rates finally start to come down. (Jono Searle/AAP PHOTOS)
He said the opposition had been "hostile" to his suite of cost-of-living policies, including energy bill rebates, cheaper childcare changes and the rework of the stage three tax cuts.
Shadow Treasurer Angus Taylor says Australian living standards have been under pressure and are not expected to recover until at least 2030.
"That's another two terms of parliament, and this is on the government's own numbers, which the treasurer tried to bury in his mid-year budget update," Mr Taylor told ABC radio on Tuesday.
Were the coalition to return to power, he promised a focus on business investment to drive productivity and improve real incomes.
The federal election must be held by May at the latest.
While inflation is expected to moderate further and real incomes improve, Australia's jobs market is expected to weaken a little over the course of 2025 as growth remains fairly fragile.
SEEK senior economist Blair Chapman said the jobs market was still stabilising after the post-COVID-19 pandemic hiring boom.
Hiring in the care economy, including health care and child care, is unlikely to slow down in 2025. (Bianca De Marchi/AAP PHOTOS)
Advertising on the jobs marketplace was weaker towards the end of 2024 compared to earlier in the year, he said, reflecting normalising labour demand easing from a very high base.
But hiring in the care economy, including jobs in health care and child care, was unlikely to slow down.
"That ongoing demand for care workers isn't going away and that's really continuing to drive employment - and that's going to continue well into 2025," Mr Chapman said.
He predicted stronger hiring in consumer-facing sectors, such as hospitality and retail, as widely-expected interest rate rate cuts support consumer spending.
The tech sector was similarly expected to clock a stronger year as businesses looked to make the most of generative artificial intelligence and embraced digital transformation.
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