Consumer confidence was largely unchanged this month, which suggests the economy may find it harder to grow in the coming quarters.
Photo: VNP / Daniela Maoate-Cox
The ANZ-Roy Morgan survey of consumers shows headline confidence eased 1 point to 114, whereas the proportion of people who thought it was good time to purchase a major house hold item, a key retail indicator, gained a point.
ANZ chief economist Sharon Zollner said consumers continued to say they were hesitant about spending, but the sales data tells a different story.
"I think the mismatch might reflect that while consumption comes out of income, what we have actually seen since Covid hit people have been substituting nice things for overseas holidays, people are getting a spa instead of that trip to Europe."
However, she's questioning if households will keep spending as much as they have been.
She said the opening of a trans-Tasman travel bubble may result in people looking to save more, as the prospect of overseas holidays becomes more of a reality with the global vaccine rollout.
"We have of course seen a big increase in household debt, as well as government debt, and that does suggest a little bit of caution about how sustainable this really strong spending may be."
Consumer's inflation expectations eased a touch over the month, to 4.4 percent, but is still a percentage point higher than average.
"Higher household inflation expectations make it easier for retailers to raise prices without fear of customer backlash, and can also impact wage demands if the labour market is tight, which a range of indicators suggest it is," Zollner said.
