“The fall in consumer confidence suggests there could be a direct negative impact on households as well. The other additional cut was in response to the stop-start nature of the consumer recovery and the housing market.”
The future conditions index, which is made up of forward-looking questions, fell by eight points to 96.9, while the current conditions index also fell, down one point to 87.1.
In a further sign of consumers feeling the pinch, perceptions of current personal finance situations fell three points to -16%.
As for whether respondents expect to be better off this time next year, a net 12% believe they will be, down 11 points.
House price inflation expectations did rise, up from 3.4% to 3.6% year-on-year, with Auckland sitting at 4.1%.
“In a still-soft economy, higher household inflation expectations are unlikely to boost wage outcomes or make it meaningfully easier for firms to raise their prices.”
How consumers feel about about the economic outlook over the next 12 months fell four points to -20%.
But the largest fall in perceptions related to the five-year-ahead measure, which fell from 9% in April to -1% in May, the lowest it has been over the past eight months.
Two-year-ahead CPI inflation expectations eased slightly from 4.7% to 4.6%, retaining most of the increase from April.
“Indeed, the perception that inflation is going to be much higher than any forecasters are anticipating it to be is likely to contribute to the sense of a cost-of-living crisis, potentially dampening spending, if anything.
“But no doubt the data will continue to throw up surprises, and the RBNZ [Reserve Bank of New Zealand] is in a good position to respond to developments as they unfold.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
