Consumer confidence is flat in May, with Kiwis still wary about the economy according to ANZ.

The ANZ-Roy Morgan Consumer Confidence Index in May is at 79.2 per cent compared with 79.3 per cent last month, though more people believe inflation pressures will ease in the next two years, falling from 5.2 per cent in April to 4.8 per cent this month.

This is only the second time since 2021 that inflation expectations have dipped under the 5 per cent mark.

Peoples’ perceptions of their personal financial situation were up from minus 25 per cent last month to minus 20 per cent in May.

A net 5 per cent of people surveyed expected to be better off by this time next year, down 1 percentage point on last month, while fewer respondents felt it was a bad time to buy a major household item, down 3 points to 34 per cent in May.

Perceptions of the economic outlook in 12 months lifted 7 points to minus 43 per cent, while the five-years-ahead measure fell from minus 2 per cent to minus 12 per cent.

House price inflation expectations were flat at 0.4 per cent compared to 0.3 per cent recent last month, with expectations of an increase strongest in Auckland (1.5 per cent).

One-year-ahead consumers price index (CPI) inflation expectations fell back to 4.8 per cent, down from 5.2 per cent.

ANZ chief economist Sharon Zollner said CPI expectations are “finally interrupting what was starting to look like an upward trend”.

Zollner said the labour market remained tight and ongoing cost of living increases “continue to bite” Kiwis.

“One feature of the data recently has been that retail spending has been more robust than the indicators from this consumer confidence survey would suggest is likely,” she said.

Zollner said population growth and “an extreme dislike of inflation” are likely contributors to retail spending.

“Inflation in and of itself is not a reason for consumers to decide en masse that they’d better save more for a rainy day, the way rising unemployment is.”

She said: “Consumer confidence has therefore overstated the decline in retail spending, and as falling inflation improves things on the misery front, the corresponding bounce in confidence is likely to overstate the likely rebound in retail spending.”