Consumer confidence remains marginally pessimistic

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Consumer confidence has edged higher but remains marginally pessimistic in the face of rising prices and pressure on household finances.

Photo: 123RF

The ANZ-Roy Morgan Consumer Confidence index for December gained one point to 98, with fewer people feeling better off financially now and fewer expecting to be better off in a year.

Opinion was evenly divided on whether it was a bad time to buy a major household item, seen as a key indicator of consumer sentiment, which was an improvement from the month before when opinion was negative.

ANZ’s chief economist Sharon Zollner said consumer sentiment was well below its long term average of solid optimism, but the decline from the middle of the year appeared to have levelled out.

“Households’ real spending power is under assault from inflation.”

“Job security is excellent, with the labour market so tight, but most people will be nonetheless finding it harder to make ends meet, given CPI inflation is running around 5 percent and still rising,” she said.

Respondents’ inflation expectations were steady at 5.6 percent, but growth in house prices was expected to be slower.

“The balance sheet boosts to homeowners of ever-rising house prices are fading fast, making it harder to justify that new car,” Zollner said.

She noted that long term economic expectations had also turned slightly negative, which was regarded as “very unusual”.

Wellington was the most optimistic region in the survey, with sentiment in bigger cities more positive than in the regions.

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