New Zealand Consumer Confidence Drops as Inflation Expectations Rise Above 5%

Consumer confidence in New Zealand weakened in July 2025 as inflation expectations rose to 5.1%, the highest level in over two years, driven primarily by surging food prices and rising costs in necessities such as electricity, insurance, and council rates. Despite an official inflation rate of 2.7%, these cost pressures have led to cautious household spending and a decline in sentiment, with the ANZ-Roy Morgan consumer confidence index falling below the optimism threshold to 94.7. Business confidence showed only modest improvement, and employment indicators remained weak, reflecting broader economic softness. Meanwhile, in the United States, the University of Michigan's Consumer Sentiment Index rose slightly in July but remained significantly below levels seen the previous year, with tariff concerns and expectations of rising unemployment dampening outlooks especially among non-stock-holding consumers. Both countries face challenges from inflation and economic uncertainty, but New Zealand may find some relief later in the year through expected central bank rate cuts and stronger farm incomes, which could stabilize and potentially improve the economic outlook into 2026. Overall, rising inflation expectations and cautious consumer behavior are key themes shaping economic sentiment in these advanced economies.