Consumer confidence ‘extremely low’ amid rising interest rates

Consumer confidence remains very pessimistic as households grapple with rising interest rates, but inflation expectations have fallen.

Second time in two years that consumers expect inflation to fall below 5% – latest data show annualized rate It fell to 6.7% in the year ending March.

The ANZ Roy Morgan Consumer Confidence Index was flat at 79.2 in May, a level the bank described as extremely low.

More consumers were negative about the country’s economic situation, with more than half of respondents expecting bad times to come.

ANZ chief economist Sharon Zollner said the Reserve Bank welcomed the drop in inflation expectations after a recent survey showed inflation expectations returning to 7%.

“This probably reflects the fact that CPI inflation in the first three months of the year was much weaker than anyone had expected, and the fact that the data was released relatively recently. ‘ said.

“Consumer inflation expectations don’t have much predictive power for inflation itself, so it’s not really something you’d use to predict inflation, but it’s a useful check on the Reserve Bank’s credibility.

“They expect that number to be down now, and they’d be worried if it wasn’t.”

Zorner said 34% of people with net worth believe it’s a bad time to buy major household items, suggesting more people are holding back on spending for now. .