Index identifies factors that have impacted Kiwis' confidence
Consumer confidence in New Zealand dropped this month by 3.6 points to a level of 99.1, according to the latest Westpac McDermott Miller Consumer Confidence Index.
According to the bank, an index number below 100 indicates that more Kiwis are pessimistic about the economic environment than some are optimistic. In addition, it found that consumer confidence is low in every part of the country, with sharp falls in tourist hot spots like Queenstown, Nelson, and the Bay of Plenty due to social distancing requirements and a lack of tourists from Auckland.
Westpac senior economist Satish Ranchhod said the latest figure makes sense because 2021 has been a stressful year for many New Zealand households due to the combination of COVID-19 lockdowns, the new COVID-19 variant, and rising interest rates.
This month, many households reported that their financial position has deteriorated over the past year, with a growing number expecting their finances to come under pressure in the coming year as many continue to face higher borrowing costs and re-fixing at higher interest rates.
“A large number of households will also have found their purchasing power squeezed by the rapid rise in consumer prices, which in many cases will have outpaced the growth in wages,” Ranchhod added.
Imogen Rendall, market research director of McDermott Miller Limited, commented that the “Christmas feel-good factor that often sees a jump in consumer confidence” is missing this year due to several factors.
“Fieldwork began just as news of a worrying new variant was being reported internationally. With New Zealand not yet out of the woods with Delta, the potential implications of Omicron breaching fortress New Zealand and spreading out into the community seem to have been firmly in respondents’ minds as they completed the survey this quarter,” Rendall said.
This quarter, consumer confidence took a hit across all income groups, with those in the lowest income group (less than $30,000 per annum) having seen the biggest drop in confidence of 4.6 points and now have an index score of 86.6.
“This group has seen their personal finances worsen, and many were concerned that their finances would continue to deteriorate over the coming year,” Rendall said.