But inflation expectations remain steady
ANZ-Roy Morgan’s New Zealand Consumer Confidence measurement has experienced a significant decline, falling 8.1 points to 86.4 in March, reversing recent months' steady improvements.
This downturn across most survey areas is attributed to the country re-entering recession, with a notable dip in responses following the late March GDP data release.
Stable inflation expectations
Despite the overall drop, inflation expectations remained steady at 4.5%. Expected house price inflation decreased from 4.1% to 3.4%, reflecting shifts in spending due to perceived wealth changes rather than predicting actual house price movements.
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Detailed insights
- The future conditions index dropped 8 points to 93, and the current conditions index fell 9 points to 76.
- Net personal financial situations perceived currently worsened significantly, with those feeling “better off” financially decreasing to 20% from last month, and those feeling “worse off” increasing to 44%.
- A slight increase was noted in the percentage of respondents expecting to be better off next year, rising by 1 point to a net 19%.
- Perceptions of it being a bad time to buy major household items improved slightly, dropping 6 points to a net -24%.
- Expectations for the economic outlook over the next year plunged 14 points to a net -34%, with a significant drop in positive outlook for the next five years, entering negative territory for the first time since May 2023.
Region-specific trends
House price inflation expectations saw a decrease, strongest in Canterbury and weakest in the rest of the South Island. The two-year-ahead CPI inflation expectations remained unchanged at 4.5%.
Impact of recession news
The re-entry into recession in the latter half of last year significantly impacted consumer confidence, with the responses collected after the GDP data release on March 21 markedly lower. However, confidence was already declining prior to February, indicating the drop isn't solely due to recession news, the ANZ-Roy Morgan report said.
Read the ANZ-Roy Morgan New Zealand Consumer Confidence report here.
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