Photo: RNZ
- Consumer confidence remains pessimistic
- ANZ says it may be due to economic uncertainty and food prices
- The bank retains its forecast for three more OCR cuts this year
Consumer sentiment has soured amid tariff-induced economic uncertainty and rising food prices.
The ANZ-Roy Morgan Consumer Confidence Index fell 5 points fell in May to 92.9 - a reading below 100 means overall sentiment remains pessimistic.
It comes after business confidence fell for the third month in a row.
The fall in consumer sentiment erased gains from April.
ANZ chief economist Sharon Zollner said it was the first consumer survey where most people answered after the start of "tariff noise".
"That could be a factor," she said. "Also, we're experiencing quite high food price inflation at the moment and that tends to go down very badly with consumers."
Perceptions about the outlook for the economy over the next 12 months fell 4 points to a net negative 20 percent - indicating most people thought the economy would see bad times financially.
A net 10 percent of people felt it was a bad time to buy a major household item, a key indicator for the retail sector.
"While that did lift 1 point, it's still a long way from suggesting happy days for the retail sector," Zollner said.
Other questions in the survey showed a net 12 percent expected to be better off in a year's time, down 11 points.
Household inflation expectations were largely steady, only easing 0.1 percentage points to 4.6 percent.
"That's a lot higher than a couple of months ago, with the jump possibly caused by global tariff talk, though household inflation expectations can also be sensitive to food prices," Zollner said.
"Household inflation expectations don't have a tight correlation with actual inflation outcomes," Zollner said. "But the perception that inflation is going to be so high is likely to contribute to the sense of a cost of living crisis, potentially dampening spending, if anything."
ANZ continued to expect the Reserve Bank to cut interest rates three more times this year, lowering the Official Cash Rate to 2.5 percent.
"Our best judgement is that the RBNZ will end up just shoring up the recovery because it's nothing flash at the moment," Zollner said.
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