Rising prices and Omicron concerns stifle Kiwis' confidence
Consumer confidence has plummeted to its lowest level since the 2008 Global Financial Crisis due to rising prices and Omicron concerns.
The Westpac McDermott Miller Consumer Confidence Index fell seven points in March to a level of 92.1, indicating that there are more Kiwis who are pessimistic about the economic environment than those who are optimistic.
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The survey found that the financial positions of households has deteriorated as inflation started to bite.
Michael Gordon, Westpac's acting chief economist, said “New Zealand is being buffeted by a range of powerful economic headwinds,” and that “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,” NZ Herald reported.
Increases in the prices of food and fuel, in particular, “have siphoned a large amount out of households' wallets, and that is squeezing spending in other areas,” Gordon said.
Confidence is at low levels in every part of the country.
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But both Nelson and Otago have seen particularly sharp falls in confidence in recent months, likely related to the significant challenges faced by the hospitality sector, including subdued consumer demand and widespread worker absenteeism as Omicron has rippled through the workforce.
There have also been sharp drops in confidence in many other regions.
Compounding the pressure are the continued increases in mortgage interest rates and the rapid spread of Omicron.
The survey also found that confidence fell sharply for younger people, with the index number for ages 18-29 falling below 100 for the first time since the beginning of the pandemic, with a large drop of 15.2 points to 91.9.
Households, meanwhile, reported they have become increasingly apprehensive about making major purchases, with the number of households who think it’s a good time to buy a major household item falling to its lowest level in 14 years, NZ Herald reported.
