Consumer confidence rose to 86.5 points in May, recovering from April's 80.3 reading but remaining well below the neutral 100 mark that separates optimism from pessimism.
The six-point rise in the ANZ-Roy Morgan Consumer Confidence Index appeared to be linked to a small fall in petrol prices during May, ANZ said. A net 12% of consumers now expect to be better off this time next year, up from 3% in April.
However, a net negative 25% of consumers feel worse off now than a year ago, and a net negative 20% think it is a good time to make a major purchase. Consumers expect inflation to be 5.3% over the next two years.
Wellington remained the most downbeat region, while Auckland and the South Island excluding Canterbury were among the more confident areas. House price expectations edged lower, with Canterbury the most optimistic at 3.2% and Wellington the weakest at 1.5%.
ANZ Chief Economist Sharon Zollner said consumers hate inflation and households are quick to pull back spending when costs rise. ANZ expects the Reserve Bank will begin raising interest rates from July to bring inflation under control.