Consumer confidence reaches highest level in four years

Source: Radio New Zealand

Consumer confidence has risen to the highest level in more than four years.

The ANZ-Roy Morgan Consumer Confidence index lifted 3 points to an optimistic 101.5 points in December from a still pessimistic 98.4 points in November.

While that sounds like a strong uplift, ANZ chief economist Sharon Zollner said it is not, considering anything under 100 points was pessimistic.

“Consumer confidence took a body blow from the rapid increase in inflation in 2021 and is still recovering,” she said.

The proportion of households thinking it was a good time to buy a major household item rose 8 points, though remained still slightly in negative territory at negative-1, with mortgaged households more keen to buy than others.

“Mortgage holders have had a bigger swing in willingness to spend, understandably, as interest rates have cycled,” Zollner said.

“It will be interesting to see in January whether the recent change in direction in interest rates affects this sentiment, or whether the RBNZ Governor’s reassuring words about interest rates staying low for a considerable period, alongside brighter economic headlines, see willingness to spend continue to lift.”

Inflation expectations eased to 4.6 percent from 5.2 percent, consistent with easing food price inflation.

Zollner said the drop in food price inflation could have contributed to the more positive outlook.

As for the outlook, the future conditions index made up of forward-looking questions lifted to 108.9 from 106.8, which was the highest level since July 2021, though the current conditions index remained at 90.4 points.

Still, a net 22 percent of respondents expected to be better off this time next year, which was the highest level since April.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand