Image caption Australia's mining sector is driving up the economy, prices and interest rates

Australian consumer confidence has fallen sharply as the recent run of interest rate rises start to take their toll, a survey has indicated.

Confidence fell 7% in May - its biggest monthly drop since autumn 2008 - according to study by Westpac bank and the Melbourne Institute.

However, confidence levels are still nearly 22% higher than a year ago

Australia's central bank raised its main interest rate to 4.5% earlier this month. In October, rates were 3%.

Mortgage rates have been rising even faster, putting pressure on household spending.

However, the country's economy has been doing well because of its rich natural resources, such as iron ore, which are in strong demand in the fastest growing world economies, particularly China.

The bank behind the survey said the recent turmoil on the world's financial markets was also hitting confidence.

"As we have seen with the index today interest rates are now starting to bite," said Bill Evans, chief economist at Westpac.

"The news from offshore is disturbing with the disruptions to global financial markets likely to impact the global recovery."