Roy Morgan Update May 16, 2023 – Consumer Confidence, Inflation Expectations & Interest rates in New Zealand

In this week's Market Research Update, we present the latest data on Consumer Confidence, Inflation Expectations & Interest rates in New Zealand.

The news last week was dominated by the Albanese Government’s first Federal Budget delivered by Treasurer Jim Chalmers and the Moira Deeming controversy in Victoria.

For the first time in 15 years the Federal Government is set to enjoy a Budget Surplus of just over $4 billion this year.

The Surplus is built on the back of iron ore, gas and coal.

Strong commodity prices – especially over the last year - have significantly increased taxation revenues for the Government.

Strong employment growth over the last year is also a big factor – increasing taxation revenues.

The latest Roy Morgan employment numbers for April showed more than 600,000 new jobs have been created over the last year.

One of the key measures in the Budget was the increase to the JobSeeker allowance of $40 per fortnight – and an increase of over $90 per fortnight for those aged 55+ - the majority of whom are women.

Federal Opposition Leader Peter Dutton delivered a Budget Reply speech on Thursday night but, although well received by some, this has made little impact on the weekly numbers.

Although these were positive moves, As we will see soon, this hasn’t moved the dial in a positive direction for consumer confidence. The interest rate increase of a week earlier is still clearly hitting consumers.

On the other hand, the weekly indicators show a positive result for the Albanese Government with support up 2.5% points to 57% on a two-party preferred basis – or a negative result for the Coalition down 2% to 43%. Depending how you look at it.

Government Confidence was virtually unchanged at 94 – still just below the neutral level of 100.

Now 45% of Australians say the country is ‘Heading in the Wrong Direction’ and 39% say ‘the Right Direction’.

There was no ‘Budget Bounce’ for the ANZ-Roy Morgan Consumer Confidence Rating which dropped 1.8 points to 75.9 last week and is now at its lowest for over three years since April 2020 – at the start of the COVID-19 pandemic.

Consumer Confidence dropped for those Paying Off Their Home to only 70.9, down 2.2 points this week and was down for Renters by 4.1 points to 74.3.

Interestingly, Home Owners were more positive last week with Consumer Confidence for this group up 2 points to 82.6 and clearly the highest of the three key housing categories.

Inflation Expectations remained unchanged at 5.3% this week - Australians now expect annual inflation of 5.3% over the next two years.

Inflation Expectations have now averaged 5.3% for the last eight weeks since late March.