Consumer sentiment lifted slightly over the past month, but many households continue to feel deeply pessimistic about their finances.
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The ANZ-Roy Morgan Consumer Confidence Index rose 3 points in August to 85.3, well off the survey's long run average of about 120.
A net 17 percent of households thought it was a terrible time to buy a major household item, an 8 point rise on the July result.
ANZ chief economist Sharon Zollner said households were not happy with higher living costs and interest rates rising rapidly and were understandably concerned about the economy's outlook.
They were also seeing the value of their homes go backwards, she said.
"Offsetting all that to some extent, in a super-tight labour market incomes are looking secure - and are currently rising rapidly."
A net 25 percent of consumers were pessimistic about the current financial situation, a 9 point deterioration on a month ago, but a net 1 percent expected to be better off in a year's time.
Unsurprisingly, a gap had opened up between those who had mortgages and those who did not, reflecting the effect of rising interest rates, Zollner said.
"Less intuitively, the group with mortgages are currently less pessimistic about the change in their personal financial situations versus a year ago.
"This may reflect that this is a higher-income group on average, meaning the increase in the cost of necessities has been more manageable."
It could also be down to noise in the data, she said.
The report comes a day after retail spending data for the three months ended June unexpectedly fell, raising the prospect the economy may have fallen into recession.
The fall suggested the Reserve Bank's (RBNZ) efforts to cool inflation by slowing consumption was having some effect, Zollner said, although the latest retail spending data was extremely volatile due to Covid-19 disruptions.
Weaker spending activity did little to change consumer's inflation expectations which remained at 5 percent.
As a rule of thumb, if consumers expected prices to rise it made it easier for businesses to lift prices without the fear of losing market share.
"We expect the RBNZ to keep on with its plan to raise the OCR in 50 basis point steps in the remaining two meetings this year," Zollner said.