Consumer confidence has fallen to its lowest level since the 2008 Global Financial Crisis with significant drops among women and young people, according to Westpac research.
The Westpac McDermott Miller Consumer Confidence Index released on Tuesday shows a drop of 7 points to 92.1. Anything below 100 indicates "there are more New Zealanders who are pessimistic about the economic environment than there are those who are optimistic".
In December, the index sat at 99.1. Before that, the last time it was below 100 was at the start of the COVID-19 pandemic. March's result is the lowest consumer confidence has been on the Westpac index in more than 13 years.
"New Zealand is being buffeted by a range of powerful economic headwinds," Westpac acting chief executive Michael Gordon says.
"Many households have reported that their financial position has deteriorated over the past year, and a growing number expect their finances will come under pressure over the months ahead."
"One of the biggest concerns for New Zealand households has been the rapid rise in the prices of many household goods, which has far outpaced the growth in wages. In particular, increases in the prices of food and fuel have syphoned a large amount out of households' wallets, and that is squeezing spending in other areas."
StatsNZ in January reported that inflation was at a 30-year high and prices have only continued to increase as a result of supply chain issues due to COVID-19 and now the war in Ukraine.
The Government has pointed to those mostly international factors as being responsible for the skyrocketing of prices of household items and petrol, but did come under fire earlier this month when the Prime Minister initially wouldn't accept Kiwis were facing a cost-of-living "crisis".
Jacinda Ardern eventually acknowledged that last week when the Government also slashed fuel excise tax by 25 cents and halved public transport costs for three months to help ease the pain at the pump.
Facing questions over how the Government is responding to rising cost-of-living, Ardern has consistently noted that there will be increases to the benefit, minimum wage and Family Tax Credits in April as well as the return of the Winter Energy Payment in May.
Finance Minister Grant Robertson on Tuesday said the Omicron outbreak, ongoing supply chain problems, the war in Ukraine and the effects of the "global energy crisis" were all "causing stress to many households".
"However, the economy is in good shape," Robertson told Newshub in a statement. "Last week’s GDP results showed a solid rebound in the December quarter. This means we are in a good position to help New Zealanders deal with cost of living increases including taking swift action on fuel prices.
"More relief is coming in April and May too, with increases to benefits, student allowances, Working for Families and Superannuation. The Winter Energy Payment also kicks in.
"The opening of borders to foreign workers and tourists will also help accelerate the recovery and help boost the hospitality and tourism sectors. The experience overseas also indicates that household spending rebounds once the peak in Omicron cases passes."
The Westpac report, which begins with a subsection titled 'Now is the winter of our discontent', describes the Omicron outbreak as a "big worry" for households with many people choosing to stay home.
"The resulting weakness in hospitality spending has been a particular drag in regions like Queenstown and Nelson, but areas like Auckland and Wellington have also felt the pinch."
It found confidence was low across all of New Zealand and "households are nervous about the outlook for the coming year".
"As well as the rise in consumer prices, higher borrowing costs have taken a bite out of many households’ disposable incomes," Gordon says. "The rapid spread of Omicron will also be worrying many households."
Men's confidence hasn't shifted significantly from last quarter (sitting at 99.9 points), but the same can't be said for women, whose confidence has dropped 14.7 points to 84.7.
"Women are likely to be feeling the squeeze on household finances with rising prices and the threat of more to come as the repercussions of sanctions on Russia continue to ripple out around the world," says Imogen Rendall, the market research director for McDermott Miller Limited.
"Confidence of younger people aged 18-29 has fallen below 100 for the first time since the beginning of the pandemic with a large drop of 15.2 points to 91.9. Increasing living costs, a squeeze on disposable income and rising borrowing costs must make the prospect of buying a home seem that much more difficult for those in this age group."
Confidence among those aged between 30 and 49 remains unchanged at 103.2 points, while confidence for those over 50 has been declining for the past year and dropped 11.7 points this quarter to 82.8.
"Not only do a greater proportion in this age group report that they are worse off financially compared to a year ago, a considerable number expect to be worse off this time next year. For those on fixed incomes, this prospect must be daunting."
The survey was conducted between March 1 and 17, with a sample size of 1559 people. The margin of error is 2.5 percent.
