Consumer confidence as measured by Roy Morgan fell further this week in Queensland, Victoria, South Australia and Western Australia, but we may be better off than we think.

According to the ANZ, households are in solid shape and the money that had been squirreled away over recent years remains largely untouched, despite high inflation and interest rates.

It believes that an increase in wages later this year could deliver the pick-me-up the economy needs, even if forecast interest rate cuts don’t eventuate.

Annual wage increases have risen in the past year and up to the March quarter were running at 3.7 per cent.

The bank believes the fall in confidence may not truly reflect the strength of Australian households, but a separate report from Suncorp claims that almost half of Australians can’t afford to fill their shopping trolley and Gen Z had been hit hardest.

Suncorp found that shoppers were shifting to cheaper brands and half of those it surveyed were eating the same meal several days in a row.

The younger generations were making the biggest efforts to curb spending, according to Suncorp’s Cost of Food report. About 40 per cent of people had stopped dining out in a bid to save money.

ANZ senior economist Adelaide Timbrell said May was the weakest month average for consumer confidence since December 1990.

The weekly result was the fifth worst since January 2020 and represented the 13th week consecutive week in which the index was below 80.

The survey by Roy Morgan showed that the time to buy a major household item had improved by the question of current financial conditions fell by more than four points. Current economic conditions was also down.

“Those paying off their homes still have far lower average confidence than renters and outright owners, despite housing prices lifting since mid-February,” ANZ senior economist Adelaide Timbrell said.

The index fell below its average around the time of the 2021-22 Federal Budget.

Despite the reading, ANZ said Australian households were more resilient than many believed.

“The starting point for real household incomes heading into this interest rate hiking cycle was elevated,” the bank said.

“Looking at the level of real incomes presents a very different picture to developments of the past year.

“The longer-trend in real wages is also more positive than you might think. Savings buffers (in aggregate) remain untouched.

“If the household sector is in solid shape, then weakness in consumption this year could reflect discretionary spending coming back to more normal levels, not a forced across-the-board retrenchment.

“A lift in real incomes towards the end this year flags a 2024 pick-up in household spending, even without the rate cuts.”