SYDNEY, Feb 13 Reuters Australian consumer sentiment rebounded to a 20month high in February as a slowdown in inflation fuelled hopes interest rates had finally peaked and boosted spending intentions, a survey showed on Tuesday.

The WestpacMelbourne Institute index of consumer sentiment jumped 6.2 in February, from January when it fell 1.3. The index reading of 86.0 showed pessimists still outnumbered optimists, much as it has for the past year or more.

Political partisanship was a notable feature of the survey as the confidence index among supporters of the Liberal National opposition slipped to 77.6, while that for supporters of the ruling Labor Party surged to 103.8.

While sentiment is still firmly pessimistic there finally looks to be some light at the end of the tunnel for Australian consumers, said Matthew Hassan, a senior economist at Westpac.

Moderating inflation and shifting expectations for interest rates appear to be the main factors behind the lift.

Consumer price inflation slowed sharply to a twoyear low of 4.1 in the December quarter, while the Reserve Bank of Australia RBA held rates at 4.35 at a policy meeting last week.

The central bank did leave the door open to another hike if needed, but markets are wagering the next move will be down, albeit not until later in the year.

The survey found the proportion of consumers expecting mortgage rates to rise in the next 12 months dropped to 42, from 52 in January and 61 in December.

This had a big…