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- Consumer confidence slips to a below average reading of 89.2 in March from 97.5 in December
- Talk of global trade war risks and ongoing cost of living pressures is driving the step back
- A big increase recorded in the number of people who think it's a bad time to buy a big ticket item
- The recovery in the economy will be slower than expected
Consumer confidence has taken a tumble amid concerns about uncertainty in the local and global outlook.
The Westpac-McDermott Miller Consumer Confidence Index was down eight points to 89 in the three months ended March.
A reading below 100 is pessimism.
Westpac senior economist Satish Ranchhod said increased trade tensions and related volatility in financial markets has cast a shadow over the future.
He said households were still struggling with financial pressures from the cost of living crisis with increasing bills for food, insurance and rates.
"The early part of the year has seen consumer confidence taking a knock," Ranchhod said.
"The past few weeks have seen increased trade tensions and related volatility in financial markets. That's adding to uncertainty for New Zealand households."
Cost of living crunch
Consumers are still being hit with sky-high bills for necessities like food, local council rates and insurance.
Spending on groceries had seen "large increases" causing concern for consumers buying essentials at the supermarket checkout.
"While inflation is now finally back close to two percent, many of us are still grappling with the big increases in living costs over the past few years that have eaten away at our spending power," he said.
"Furthermore, we're still seeing large increases in the cost of essentials like food and local council rates. In the face of that ongoing squeeze on their spending power, it's no surprise that many households still feel like they're going backwards."
People continued to cut back their spending on hospitality.
"Twenty-seven percent of the households we spoke to told us they've reduced their spending on activities like dining out or in bars over the past year," he said.
There was a fall in the number of people who think it's a good time to purchase a major item for the home at -15.6 compared to -2.6 in December.
Capital struggles
Confidence was low right across the country but no region was lower than Wellington (80.5) with the lingering chill of the tightening in government spending still being felt.
On the other hand, the South Island was more upbeat with the pick-up in commodity prices and international tourism providing a boost.
Canterbury recorded the highest level of confidence with an index result of 95.4, while Otago (94.7) and Southland (92.7) were among the leaders.
In Auckland a reading of 91.3 was recorded, taking a dive from a positive result in December of 106.5.
"Confidence is in the doldrums in Wellington. In contrast, households are more optimistic in regions that have a strong rural backbone or tourism ties, especially in the lower South Island," Satish Ranchhod said.
All age groups were feeling more deeply pessimistic according to market researcher McDermott Miller Limited.
"Men's confidence has dropped considerably this quarter by 11.3 points to an index score of 97.3," said Market Research Director, Imogen Rendall.
Confidence among women had also dropped and they remained much more pessimistic at 81.4, a drop of 5.8 points.
"Both groups are concerned about New Zealand's economic outlook, with only two in ten men and fewer than one in ten women expecting good economic times in New Zealand over the next year," she said.
Meanwhile Ranchhod said the outlook pointed to a gradual recovery with a range of concerns still worrying New Zealand households.
