New Zealand consumer confidence dropped in October from a three-year high although it remains at its third highest level for that period.

The ANZ-Roy Morgan consumer confidence index fell four points to 126.2 in October, with the current conditions index dropping 3.3 points to 124 and the future conditions measure down 3.8 points to 127.8.

"History suggests consumers should be feeling a little spooked," said ANZ Senior Economist Sharon Zollner. "A sharply weaker housing market typically sees consumers' appetite to spend drop in tandem. Together with the uncertainty over government policy, one might think that consumers would be in a slightly grave mood. However, that does not appear to be the case."

Zollner said sentiment was increasingly diverging from data on consumer spending, which has been weaker than expected lately. Electronic card transaction data released on Tuesday shows spending fell 0.1 per cent in September, below expectations.

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"The question is whether consumers are putting their money where their mouth is. We suspect the 'truth' for consumption may lie somewhere in between very high surveyed confidence and weak electronic card spending data (which does not cover the full gamut of consumption)," Zollner said.

A net 15 per cent of those polled felt financially better off than they did a year ago, down from September's 10-year high of 19 per cent net positivity. Those expecting to be better off in a year's time dipped to 34 per cent from 36 per cent.

For the economy as a whole over the next 12 months, a net 25 per cent expected better times financially versus 30 per cent last month, while on a five-year horizon, a net 25 per cent expected good times financially versus 29 per cent in the prior survey.

Those deeming it a good time to buy a major household item fell to 34 per cent from 36 percent, while 66 per cent expected prices to go up in the next 12 months, with expected inflation of 3.5 per cent. That compares to 67 per cent and 3.1 per cent in the prior survey. A net 55 per cent expected house prices to rise in the next two years, the same as a month earlier.

ANZ's confidence composite gauge - which combines business and consumer sentiment - "continues to indicate strong economic momentum and is certainly suggesting fear is no handbrake on the economy at present," Zollner said.