A hot summer appears to have done nothing to improve the mood of consumers faced with surging inflation and the threat of a widespread outbreak of the Omicron variant.
Household budgets are under pressure with consumer prices running at nearly 6 percent. Photo: RNZ / Rebekah Parsons-King
The ANZ-Roy Morgan Consumer Confidence index for January is marginally lower at 97.7 from 98.3 in December, with fewer people feeling better off financially at present and only slightly more cheery about their prospects over the coming year.
"Households' budgets are under cost of living pressure, with [https://www.rnz.co.nz/news/business/460314/inflation-rises-to-highest-annual-rate-since-mid-1990
CPI inflation running around 6 percent] particularly punitive for those who operate with very small buffers between incomes and outgoings, and who spend a large proportion of their income on necessities," ANZ chief economist Sharon Zollner said.
The labour market was strong and job prospects excellent, but most workers would still be out of pocket as wage growth lagged the rise in prices, she said.
Pessimism still dominated the near term outlook, and there was reduced appetite for buying a big ticket item such as a new appliance or car, with a net 4 percent saying it was not a good time to buy.
"The housing market is cooling rapidly; credit is abruptly harder to get. Not the best time to splurge, appears to be the consensus," Zollner said.
Respondents' inflation expectations rose to 5.8 percent, but growth in house prices was expected to remain softer.
Consumer prices rose 5.9 percent in the year ended December, with expectations it will head higher in the early part of the year before gradually starting to ease, prompting the Reserve Bank to continue to to raise interest rates to counter the inflation surge, which would increase household borrowing costs.
Confidence was strongest in the Wellington region and weakest in the South Island outside of Canterbury.