Consumer confidence remains low as anti-inflation measures bite

4:13 pm on 28 October 2022
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Pessimism continues to dominate consumer sentiment as households try to manage the rising cost of living.

The ANZ-Roy Morgan consumer confidence index was unchanged for the third consecutive month in October, at 85.4, well below its long run average of about 120.

The proportion of people who believed it was a bad time to buy a major household item - a good retail indicator - improved three points from September to a net 22 percent.

ANZ senior economist Miles Workman, said the survey did not tell the full story about reluctance to buy big ticket items.

"That survey response has come back - for a number of months - saying no this is a terrible time to be buying.

"Then you look at the current spending data and you just keep getting these positive surprises. Households are saying one thing about what they are going to do and then they are doing another," Workman said.

There was little change for household inflation expectations, down 0.1 percent to 5 percent, but it was much lower than inflation expectations for businesses, which was at 6.1 percent.

"It's very unusual for businesses' inflation expectations to sit higher than consumer inflation expectation," ANZ economists said.

Workman said traditionally businesses had been better at picking real inflation than households, and the Reserve Bank would hope households were right this time.

ANZ said households were finding the rising cost of living "hard to deal with", but they were being aided by "excellent job security and strong wage growth".

A net 4 percent of households expected to be better off this time next year, which was unchanged from last month.

Perceptions around the economic outlook in a year's time fell, but ANZ said it may have been influenced by the strong inflation data that saw economists revise up their interest rate forecast.