NZ consumer confidence slips from 7-year high as inflation expectations firm

Thursday 20th February 2014

New Zealand consumer confidence fell from its highest level in seven years this month, while remaining elevated, amid a pickup in inflation expectations and the prospect of interest rate increases.

The ANZ Roy Morgan consumer confidence index fell to 133 from 135.8 in January. Both the current conditions index and future conditions index slipped back 3 points, to 127 and 137.1 respectively.

The decline wasn't enough to dent ANZ New Zealand's assessment that elevated consumer confidence points to the potential for strong economic growth, as its seasonally adjusted measure showed a slight improvement to a seven-year high.

"It's now well flagged that interest rates are set to move up - a typical bug-bear for sentiment," said ANZ chief economist Cameron Bagrie.

"However, that dynamic looks to be being usurped by the combination of rising asset prices, firming employment prospects, more people participating in the labour force, a falling unemployment rate and reasonable income growth."

The survey shows prices in general are expected to rise an annual 3.5 percent in the next two years, up from 3.3 percent in last month's survey, while house prices are seen rising 4 percent, down from 4.2 percent in January.

A net 47 percent of those surveyed say it is a good time to buy a major household item, down from 50 percent last month.

Those who felt better off financially than a year ago eased to a net 7 percent from 11 percent, while those expected to be better off in a year's time fell to 36 percent from 41 percent.

Looking at New Zealand as a whole, a net 38 percent expected the country to be better off economically in the next 12 months, down from 39 percent last month. A net 37 percent thought New Zealand would enjoy good times over the next five years, down from 40 percent in January.

BusinessDesk.co.nz

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