The ANZ-Roy Morgan Consumer Confidence Index was unchanged for September, well below its long-run average. Photo: RNZ / Nate McKinnon
Consumer confidence remains subdued as households face rising costs, falling house prices and rising mortgage rates.
The ANZ-Roy Morgan Consumer Confidence Index was unchanged for September, at a pessimistic 85.4, well below its long-run average of about 120.
A net 25 percent of households thought it was a bad time to buy a major household item, an 8 point fall from August.
The good/bad time to buy indicator is the best guide for retail spending.
ANZ said despite the pessimism, the tight labour market was a positive for households, which contributed to strong job security and wage growth.
"Retail sales data remains extremely volatile due to Covid disruptions, but it's fair to say that so far at least it has not dropped away as sharply as reported willingness to buy would suggest it should have.
"This likely has a huge amount to do with the very strong labour market and solid wage growth and job security that comes with that. But if wage growth (and therefore domestic inflation) remains too high for too long, the Reserve Bank (RBNZ) is likely to respond with a higher official cash rate than otherwise," the bank said.
Inflation expectations remained about the same as 5.1 percent, and a net 4 percent expected to be better off this time next year, up 3 points.
House price inflation expectations fell to just 0.5 percent, they were the highest in Auckland at 2 percent and the weakest in Wellington at -0.7 percent.
ANZ said another notable feature of the data was the widening gap between future and current confidence, which tended to be a hallmark of tougher economic times.
The gap showed households were less pessimistic about the future than current conditions.
"While the gap isn't large right now, this is a trend worth keeping an eye on. That said, given many of the timely data remain consistent with too high inflation, the RBNZ can't afford to give activity indicators too much weight in their decision making - they have to get on top of core inflation before wage-price spiral risks materialise further."
