Consumer confidence at highest level in nearly two years

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Retailers have been reporting subdued spending going into the Christmas shopping season.
Photo: 123RF

Consumer confidence has risen to its highest level in nearly two years, but households remain generally pessimistic.

The Westpac McDermott Miller Consumer Confidence Index rose 8.7 points in December to a score of just under 88.9, the best since early 2022.

A reading below 100 indicated pessimists outnumbered optimists.

Westpac senior economist Satish Ranchhod said more households expected the economy to strengthen over the coming year and expected their personal finances would improve.

“Inflation has started to cool, with prices for some necessities easing back. There is also a growing expectation that we are at, or close to, the peak in interest rates. That will be welcome news for many households who have seen their finances squeezed over the past few years,” he said.

But in bad news for retailers, Ranchhod said households were not opening up their wallets, with spending appetites remaining weak going into holiday shopping season.

The survey showed most people thought it was a bad time to buy a major household item.

“Similarly, households have told us that they’ve been cutting back their spending on leisure activities. Consistent with that, retailers have been reporting subdued spending going into the Christmas shopping season,” Ranchhod said.

McDermott Miller market research director Imogen Rendall said the survey also revealed contrasts in confidence across different demographics.

“Men’s confidence has jumped this quarter to 96.3 while women remain deeply pessimistic at 81.8. Close to half of women believe they are worse off financially than they were a year ago, compared with just over a third of men,” she said.

Confidence among different age groups was similar, with 30 – 49 year olds recording the biggest jump in confidence.

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