22 Mar 2023

Consumers remain pessimistic as financial pressures to become more intense

10:29 am on 22 March 2023
Man paying with NFC in a grocery store.

There is little relief in sight for financial pressure. Photo:

Consumer confidence has improved slightly but remains deeply pessimistic as rising interest rates and prices squeeze household budgets.

The Westpac McDermott-Miller survey shows a 2.1 point rise in sentiment in the March quarter to 77.7, off the record low touched in December.

A reading below 100 indicated pessimism.

Westpac senior economist Satish Ranchhod said households were being battered by the rising cost of living and borrowing.

"The cost of necessities like food, housing and utilities have skyrocketed over the past year. And for many households, those increases have been compounded by a rise in borrowing costs."

"Putting that altogether, households are having to splash out more cash, but they're getting a lot less bang for their buck."

The survey showed that overall, current and expected conditions improved slightly, but households were reporting that their own financial position had deteriorated, although more thought their position would improve in the future.

However, Ranchhod said there was little relief in sight, and for many the pressure would become more intense, leading to a cut back in spending.

"Consumer prices, including food prices, are set to continue rising rapidly over the coming months. In addition, many borrowers now face refixing their mortgages at substantially higher interest rates."

The number thinking it was a bad time to buy a big ticket item fell slightly but remained significantly negative.

"Confidence remains around the sorts of levels that we saw during the recession in the early-1990s and again during the Global Financial Crisis in 2008/09. "

Only one district - Nelson/Marlborough/West Coast - recorded positive confidence in their region's outlook, although more than half the regions had a reduced level of pessimism.

The recent storms and floods battered confidence in Gisborne and Hawke's Bay, which was deeply negative about the regional outlook.

McDermott-Miller market research director Imogen Rendall said the marginal lift in sentiment was still within the error of margin for the survey.

"For every consumer who is better off financially now compared with a year ago, there are more than two that are worse off."

"Consumers' assessment of their own future financial prosperity as well as the economic future of New Zealand is ominous ... and it is hard to see things getting better anytime soon," Rendall said.

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