National Party deputy leader Nicola Willis is accusing the Government of "failing the squeezed middle" as consumer confidence hits a record low.
The latest ANZ-Roy Morgan Consumer Confidence survey published on Friday shows that consumer confidence dropped even further in March to reach a fresh record low in data that began in 2004.
The report highlights the "perfect storm" of the COVID-19 Omicron outbreak, rising living costs due to three-decade high inflation sparked by supply chain constraints and Russia's invasion of Ukraine, a retreating housing market, and rising interest rates.
"Households are facing something of a perfect storm. Omicron is causing disruption and probably a degree of alarm, but the subdued level of forward-looking indicators highlights that there is a lot more going on than that," the report says.
"Indebted consumers may not like higher interest rates but all consumers hate inflation, the 'thief in the night' that eats away at purchasing power and makes households feel that they are going backwards, even with a strong labour market."
It's noted that confidence in New Zealand is "significantly lower than in Australia", where both inflation and interest rates are below us, and their Omicron outbreak less recent.
Willis, National's finance spokesperson, says it comes as no surprise to her that Kiwi families are feeling the pinch.
"Kiwis expect they'll keep falling further behind under Labour. As ANZ has said today, things have gone from bad to worse," Willis said on Friday.
"The net number of households who believe they will be better off in the next year has fallen to a record low. Inflation expectations at 6 percent are well above the Reserve Bank's target range of 1-3 percent.
"With a majority of households now saying it's a bad time to buy a major household item, it's clear Labour's economic mismanagement and failure to provide tax relief to the squeezed middle is making life harder and harder for Kiwi families."
National wants to lift the income tax brackets by just over 11.5 percent, to match the 11.5 percent increase in the cost of living over the last four years.
According to National, a family with two kids on an average household income of $110,000 would qualify for a $1600 income boost.
But National's same tax proposals would see leader Christopher Luxon himself get an $18,000 income tax reduction.
Finance Minister Grant Robertson acknowledged it's a "challenging time" for New Zealanders.
"The survey reflects the spread of Omicron and rising cost of living due to global factors. It's in response to this that we have acted to support households through temporarily cutting fuel excise duty and there is further support from today to help those on low and middle incomes with the cost of living increases," he told Newshub.
"The Winter Energy Payment will also kick in from the beginning of May. The experience overseas also indicates that household spending rebounds once the peak in Omicron cases passes."
How is the Government helping?
As of April 1, benefit rates increase by between $20 and $42 per adult per week, while the minimum wage rises from $20 per hour to $21.20, and Working for Families tax credits are bumped up too.
Then in May, the Winter Energy Payment returns until October - $20.46 a week for eligible single people with no dependents and $31.82 a week for couples and people with dependent children.
The Government also announced earlier this month that $0.25 per litre of fuel will be slashed from petrol taxes and public transport costs will be halved for an initial three months to help ease the financial pressure at the pump.
According to Stats NZ, imports of petroleum and petroleum products, needed to fuel the domestic food supply chain, have increased 81 percent across January and February 2022 when compared to the same period in 2021.
This has contributed to a 6.8 percent rise in the price of food, squeezing low- and middle-income earners, and forcing the Government to acknowledge a cost of living crisis.
The price of fruit and vegetables increased by a whopping 17 percent in February compared to the same period last year. In addition, the latest Trade Me data shows rents increased by 8.5 percent or $45 to a record-breaking $575 per week in February.
On top of that, the Reserve Bank has been creeping up interest rates after house prices shot up by 30 percent in one year, sparked by the historically low 0.25 percent Official Cash Rate (OCR) imposed at the start of COVID-19 to stimulate the economy.
The OCR hit 1 percent earlier this year, which according to Reserve Bank Governor Adrian Orr, will cost the average mortgage holder an extra $825 a year, or $16 a week.
Auckland house prices have now fallen for the first time in two years, the latest OneRoof-Valocity House Value Index has found. Auckland houses are now worth $1.55 million on average, with values falling 0.1 percent during the first three months of this 2022.
ANZ's house price inflation expectations have fallen to 2.7 percent, the lowest since July 2020. The bank expects inflation to remain at 6 percent, only the second time it's breached the 6 percent level.
