The report results suggest Kiwis are gradually regaining faith in the economic outlook. However, concerns over inflation and broader economic uncertainty continue to linger.
The consumer confidence index reflected a notable improvement in sentiment, and the future conditions index rose by four points to 105.2. Meanwhile, the current conditions index increased by six points to 88.0. These gains point to more positivity among New Zealanders regarding their personal situation and the national economic trajectory.
Perceptions of current personal finances climbed eight points, reaching -13 per cent. A net 23 per cent of respondents expected to be better off this time next year, up seven points from the previous month. This marks a welcome shift in sentiment, but many households remain cautious.
Despite the uplift in overall confidence, inflation expectations are on the rise. The survey revealed expectations for inflation two years ahead jumped to 4.7 per cent, up from 4.2 per cent the previous month. This is the highest reading since July 2023.
The increase may be partially driven by global tariff discussions. However, the Reserve Bank and economists note that New Zealand is not directly affected by these measures. In fact, some believe the wider global economic slowdown could eventually dampen inflation within New Zealand.
The large rise in inflation expectations highlights the sensitivity of households to economic headlines and price pressures. Household expectations do not carry as much weight as business pricing decisions, but they can still influence wage negotiations and make it easier for firms to raise prices.
Expectations for house price growth remained unchanged at 3.4 per cent. This remains below the December peak of 3.9 per cent. This stagnation suggests the housing market may be stabilising after recent volatility and interest rate hikes.
Other key insights from the survey included a small improvement in perceptions of the economic outlook over the next 12 months, which rose four points to -16 per cent, and a three-point rise in the five-year-ahead measure to 9 per cent. However, consumer appetite for big-ticket purchases remains low, with a net 11 per cent believing it is a bad time to buy major household items—a figure that, while improved, still reflects a cautious retail environment.
Looking ahead, ANZ economists have revised their expectations for monetary policy, now forecasting that the Official Cash Rate (OCR) could be reduced to 2.5 per cent by the end of the year, down from the current 3.5 per cent. Two additional cuts are now anticipated, providing potential relief for indebted households and supporting a slow but steady recovery in consumer confidence.
While the economy appears to be turning a corner, albeit slowly, the broader picture remains one of caution. With global uncertainty still casting shadows and inflation expectations climbing, the path to a full recovery in consumer sentiment may yet prove to be a gradual one.
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