New survey shows consumers still ‘pessimistic’

Consumer confidence continues to fall as inflation expectations rise.

The ANZ-Roy Morgan Consumer Confidence index fell another 2 points this month to 83 points, which well was below the 20-year average of 114.

Anything below 100 points indicated pessimism.

Two-year ahead inflation expectations bounced up to 4.2 percent from 3.8 percent in May, with house price inflation expected to rise 3.4 percent from 3.2 percent last month.

“Households’ inflation expectations are volatile but continue to trend lower”, ANZ chief economist Sharon Zollner said.

“While nationwide house price expectations were steady, Auckland house price expectations jumped this month.”

She said the latest survey pointed to tough times for retailers, despite a 6-point improvement in the number who thought it was a bad time to buy a major appliance to a net 23 percent.

“Sticker shock could be fading, but the level of the indicator still suggests ongoing tough times for retailers,” Zollner said.

Mortgaged consumers were much more downbeat about their current financial situations and cautious about buying a major household item.

“But they are more optimistic about their personal financial situation a year from now, likely because they are expecting interest rates to fall,” she said.

“Bringing it all together, consumer pessimism is consistent with the broader economic data that shows households are tightening their belts in the face of restrictive monetary conditions, a stagnant housing market, and a softening labour market.”