Consumer confidence rises as mortgage rates drop, ANZ survey shows

ANZ's Roy-Morgan Consumer Confidence index lifted six points in June to 98.8.

Consumer confidence has bounced back in the latest ANZ Roy-Morgan survey as lower mortgage rates appear to be flowing through to borrowers.

Consumer confidence rose by six points in June to 98.8, an improvement on the five-point fall in May.

Inflation expectations are being impacted by food prices, with that figure rising 0.3 percentage points from 4.6% to 4.9% – the highest it’s been since April 2023.

ANZ chief economist Sharon Zollner said there were a few reasons for the rise in household inflation expectations.

“Global tariff noise, food price inflation of 4.4% year-on-year and perhaps concerns about energy prices due to geopolitical tensions ... household electricity prices are also rising as higher lines charges are passed on,” Zollner said.

“What households expect matters less for the inflation outlook than the expectations of those who actually directly set prices, and they don’t have a tight correlation with actual inflation outcomes.”

According to the survey, perceptions of current personal finance situations rose by three points but are still negative at -13%.

As for the proportion of households thinking it’s a good time to buy a major household item – the best indicator for retail – that lifted by three points. However it is still soft, sitting at -7.

House price inflation expectations meanwhile were steady at 3.6% year-on-year.

Looking to the future conditions index, which is made up of forward-looking questions, it rose by eight points to 104.8, recovering after last month’s fall.

The current conditions index also rose by three points to 89.8.

In perhaps the best sign of optimism, a net 20% of Kiwis expect to be better off this time next year, up by eight points.

Perceptions regarding the economic outlook over the next year rose by seven points to -13%, while the five-year-ahead figure recovered much of last month’s fall by lifting eight points to +7.

“The economy is recovering; it’s just taking a little longer than expected, and the labour market, the housing market and the consumer are at the heart of that,” Zollner said.

“Households might be sceptical but domestic inflation is on the retreat, and that should lay the path for the RBNZ [Reserve Bank of New Zealand] to ultimately be able to shore up the economic recovery with a little more monetary easing.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.