The near flat August reading gives the RBNZ little fresh signal either way ahead of its September 2 Monetary Policy Statement, where economists are broadly split between a hold and a further 25 basis point hike to 2.75%. Household inflation expectations held at 4.7%, still elevated relative to target and unlikely on its own to sway the Committee. The softer current conditions index points to lingering strain from earlier oil price shocks, even as the five year outlook hit its best level since May 2021, suggesting households see current pressures as temporary rather than structural.
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New Zealand households are still cautious but increasingly optimistic about the years ahead, a steadier backdrop for the RBNZ as it weighs a hold or hike on September 2.
Summary:
- ANZ-Roy Morgan Consumer Confidence eased 1 point in August to 98.0, still below par but 18 points above its April low.
- Two-year-ahead inflation expectations were little changed at 4.7%; house price inflation expectations eased from 2.6% to 2.5%.
- Current conditions eased from 88.5 to 83.4, while future conditions rose to 107.7, and the 5-year outlook hit its best reading since May 2021.
- The RBNZ’s September 2 Monetary Policy Statement follows a July hike to 2.50%
New Zealand consumer confidence eased marginally in August, holding below the neutral 100 mark but well clear of its April low, as households continue working through the aftermath of an oil price shock even as longer term optimism improves. The data lands days before the Reserve Bank’s September 2 Monetary Policy Statement, where the Committee faces a genuinely contested choice between holding the Official Cash Rate and hiking further.
The headline index slipped 1 point to 98.0. Current conditions eased from 88.5 to 83.4, while future conditions rose to 107.7, widening the gap between how households feel now versus what they expect ahead. A net 21% said they were worse off than a year ago, though a net 22% expect to be better off next year, the strongest such reading since January. The five-year outlook rose to +13%, its best level since May 2021, suggesting households increasingly see recent difficulties as temporary.
Two-year-ahead inflation expectations held at 4.7%, still well above target, while house price expectations eased slightly. ANZ attributed some of the softness in current sentiment to higher petrol prices in August, though these have since stabilised, and noted discretionary card spending is trending higher as Middle East disruption fades.
The Reserve Bank raised the OCR to 2.50% in July by consensus, since noting eased near-term inflation pressure following a partial Hormuz reopening. Economists remain divided over September, split between a further 25bp hike to 2.75% and a hold, a tension mirrored in this month’s data between near-term caution and longer-term optimism.
This article was written by Eamonn Sheridan at investinglive.com.