The NAB Consumer Anxiety Index fell to 60.4 points in the first quarter of 2016 – the lowest level since the second quarter of 2013 and below the long-term average of 61.8 points.
Lower overall consumer anxiety was driven by diminished concerns in retirement funding, health expenditure and job security, according to the report.
But at the same time consumers are becoming increasingly concerned by the prospect of government policy changes in the upcoming May federal budget.
Almost 27 per cent of Australians rating their anxiety associated with government policy as 'high', according to the survey.
NAB chief economist Alan Oster summed up the findings by saying consumers are less anxious about the state of the world, but they "continue to be focused on paying off debt and essential items like utilities, transport and groceries".
"“Improvements in the labour market have helped consumer spending gain momentum since late last year. We continue to expect moderate growth in consumer spending throughout 2016," Mr Oster said.
