Consumer confidence in New Zealand slightly improved in August due to tax cuts and reduction in the official cash rate, but still remains low amid inflationary pressures.

The ANZ-Roy Morgan consumer confidence index climbed to 92.2 in August from 87.9 in July, Retail NZ noted.

“In the last month we have seen working New Zealanders enjoy small tax breaks and the cutting of the official cash rate has seen banks decrease interest rates, which have both contributed to the increase in August,” said Carolyn Young, CEO at Retail NZ.

The Reserve Bank of New Zealand reduced rates by 25 basis points to 5.25 per cent in August, the first rate cut it delivered since March 2020.

Young warned that despite the improvement, tough times are expected to continue for certain retailers.

“While 17 per cent of respondents to the survey felt they would be better off next year, 23 per cent felt it was not the right time to buy a major household item,” she said. “Retailers selling discretionary or durable goods will continue to have some tough times ahead.”

However, Young said the lift in consumer confidence will hopefully provide momentum for the economy through the year to benefit retailers.