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Consumer confidence remains deeply pessimistic as households cope with rising rates, but inflation expectations have fallen.
For only the second time in two years, consumers now think inflation will fall below 5 percent - the latest data showed the annual rate fell to 6.7 percent in the year ended March.
The ANZ-Roy Morgan Consumer Confidence Index was flat in May at 79.2, a level the bank described as an extremely low level.
More consumers were negative about the country's economic conditions, and more than half of respondents expected bad times ahead.
ANZ chief economist Sharon Zollner said the Reserve Bank would welcome the fall in inflation expectations, after a recent survey showed expectations returning to 7 percent.
"It probably reflects the fact that CPI inflation was quite a bit weaker than everyone expected in the first three months of this year, and that data was out relatively recently," she said.
"Consumer inflation expectations don't have a great deal of predictive power for inflation itself, so they're not something we would use to actually predict inflation but they are a useful credibility check for the Reserve Bank.
"They would expect those numbers to be falling now and if they weren't, they would be worried."
Zollner said a net 34 percent of people thought it was a bad time to buy a major household item, suggesting more people were holding back on spending for now.