The 2.1 per cent boost in sentiment was driven by an uplift in confidence in Australia's economic conditions.
'Current economic conditions' jumped 4.8 per cent, according to ANZ-Roy Morgan's weekly consumer confidence survey, and and 'future economic conditions' lifted six per cent.
The final score of 87.8 was the highest in four months but was still well below the long-term monthly average of 111.9.
ANZ economist Catherine Birch said strong spending in the face of successive rate hikes has quelled fears of a sharp downturn.
A fall in inflation expectations also buoyed the indicator, despite motorists bracing for a surge in fuel prices in the coming weeks when the fuel excise tax is reinstated.
Consumers may be slightly more upbeat but Australia's economic troubles are far from over, with the Organisation for Economic Co-operation and Development downgrading Australia's economic position.
The OECD is now projecting real GDP to grow by 4.1 per cent in 2022, down 0.1 percentage points from its June forecasts, and two per cent in 2023, which is 0.5 per cent lower than predictions made mid-year.
Core inflation in Australia is also expected to hit 5.4 per cent in 2022 before falling to 4.3 per cent in 2023.
The OECD's economic outlook report showed inflation spreading widely across many economies since Russia's invasion of Ukraine.
"The effects of the war and the continuing impacts of COVID-19 outbreaks in some parts of the world have dented growth and put additional upward pressure on prices, above all for energy and food," the report said.
The gloomy forecasts set the stage for Treasurer Jim Chalmers's first budget in October.
Dr Chalmers has welcomed a national conversation about how the government manages its funds to ensure it can pay for government services.
So far, the only tax reform the government has committed to is making sure multinational corporations pay a fairer share of tax.
However, shadow treasurer Angus Taylor is concerned the Labor government will revive higher taxation policies to allow them to boost spending.
"Their support for the stage three tax cuts is half-hearted, and it remains to be seen whether they will see them through," Mr Taylor told a business forum in Sydney on Tuesday.
He said higher taxes would stifle business innovation .
"Lower taxes encourage people to have a crack, to innovate, to build businesses and to build careers," he said at the Centre for Independent Studies event.
Mr Taylor's comments follow a Productivity Commission report showing stagnant innovation across Australian businesses and government, and that Australian firms are falling behind global leaders.
Dr Chalmers said the coalition government delivered the worst decade for productivity growth in half a century.
"The report shows that while the ball got dropped in the past, there are significant opportunities to boost productivity, including through greater collaboration," Dr Chalmers said.
Mr Taylor also said the budget was in a better position than expected.
"We handed over an economy and a budget in far better shape than most could have imagined."
The federal budget recorded an unexpected $50 billion improvement in its bottom line last financial year, in part due to high commodity prices.
The final budget outcome document will be released on Wednesday.
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