ANZ chief economist Sharon Zollner.
Photo: ABC / Luke Bowden
Consumer confidence lifted to 86.5 points in May from 80.3 in April
A net negative 20 percent of households think it is a good time to make a major purchase
A net 12 percent expect to be better off this time next year, up from last month’s net 3 percent
A net negative 25 percent of consumers feel worse off now, up from negative 31 percent last month
Consumers expect inflation to be 5.3 percent over the next two years
Consumer confidence has lifted off recent lows in May, although households remain firmly pessimistic and continue to rein in spending.
The ANZ-Roy Morgan Consumer Confidence Index rose six points to 86.5, recovering from April’s sharp drop but still well below the neutral 100 mark that separates optimism from pessimism.
While most measures improved, sentiment remains subdued, with many households still worried about the broader economic outlook and their own financial position.
A net 25 percent of respondents said they were worse off than a year ago, highlighting ongoing pressure on household budgets.
ANZ said the modest rebound appeared to be linked to a small fall in petrol prices during the month, offering some relief after recent rises tied to global uncertainty.
However, persistently low readings – particularly for whether it is a good time to buy a major household item – suggest discretionary spending remained under pressure, which is bad news for retailers.
However, confidence remained well below its January peak, reflecting continued concern about inflation, interest rates and the economic outlook.
Regionally, Wellington remained the most downbeat part of the country, while Auckland – despite a sharp fall earlier in the year – was still among the more confident regions, along with the South Island, excluding Canterbury.
House price expectations also edged lower, with Canterbury the most optimistic at 3.2 percent and Wellington the weakest at 1.5 percent.
Chief economist Sharon Zollner said recent years have shown that consumers “hate inflation”, with households quick to pull back spending when costs rise.
Although inflation expectations eased in May, ANZ expected the Reserve Bank will begin raising interest rates from July as it looks to bring inflation under control.
Higher borrowing costs, alongside lingering geopolitical uncertainty, are likely to keep consumer confidence fragile in the months ahead.
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