Consumer confidence rises but still below long-term average

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Inflation expectations eased from 4.4 percent to 3.8 percent – the lowest level since October 2020. (file image)
Photo: 123RF

Household inflation expectations are at their lowest level since 2020, but consumers remain deeply pessimistic about the outlook for their own finances and the economy.

The ANZ-Roy Morgan consumer confidence index rose 4 points in May to 84.9 – well below the long-term average of 110.

A reading below 100 indicated pessimists outnumbered optimists.

Inflation expectations eased from 4.4 percent to 3.8 percent – the lowest level since October 2020.

ANZ economist Henry Russell said it was encouraging to see inflation expectations easing, even though workers had less influence over wages, the growth of which had been regarded as a key inflation factor.

“Household expectations matter more broadly in terms of the consumer’s willingness to accept higher prices and … it does bode well for the [inflation] outlook.”

Despite the overall lift in confidence, households were doing it tough, Russell said.

A net 6 percent expected to be better off this time next year, about the same as April’s survey.

“It’s a pretty challenging outlook for the next six months, particularly with the deterioration in the labour market ahead,” he said.

“We’ve seen that not necessarily in this survey, but employees are starting to grow a little bit more concerned about their own job security.”

In ongoing bad news for [https://www.rnz.co.nz/news/business/517655/retail-outlook-remains-weak-despite-first-quarterly-rise-in-two-years

retailers], a net 29 percent believed it was a bad time to buy a major household item.