The index showed consumer confidence in the Bay has dropped to its lowest in 30 years. Photo / Getty Images
Consumer confidence in the Bay of Plenty has plummeted to a 30-year low, a new report shows.
Bay experts say the region could be in for an "unsettling" few months due to a sharp rise in food and fuel prices, the Omicron surge, supply chain issues, and the war in Ukraine.
However, the strong "fundamentals" of the Bay's economy such as its exports sectors would help protect it from falling harder than other regions.
The Westpac McDermott Miller Consumer Confidence Index showed confidence in the Bay dropped 8.4 points from 91.7 on December 21 to 83.3 in March 2022.
Consumer confidence had continued to tumble nationwide in recent months, dropping to a level of 92.1 in March.
That was down seven points from the end of last year and lower than when the economy first went into lockdown.
The last time confidence was this low nationally was in 2008 when the global economy was in the depths of the financial crisis, the report said.
Westpac senior economist Satish Ranchhod said consumer confidence in the Bay of Plenty has continued to fall and was now at its lowest level in more than 30 years.
"Strength in commodity export prices is still helping to support incomes in the region. However, the Bay of Plenty is being buffeted by some powerful headwinds.
"Most notably, the sharp rise in consumer prices – especially for food and fuel – is squeezing households' budgets. In addition, the rapid spread of Omicron is causing disruptions across sectors."
Ranchhod said the Bay's housing market had cooled with prices down about 2 per cent in the past month and sales now running below levels seen prior to the pandemic.
"At the same time, mortgage rates have been pushing higher, adding to the pressure on many households' disposable incomes."
Priority One chief executive Nigel Tutt said consumer confidence was down across the country.
"The fundamentals of our economy remain strong, however, businesses are growing and unemployment is low.
"While it will likely be an unsettling few months, we should be confident about the future state of our local economy."
Retail NZ chief executive Greg Harford said consumer confidence was being buffeted and the Bay was among the areas where consumers were least confident.
Customers had less cash in their pockets to spend due to interest rate rises, prices rising, less job security, and the ongoing concerns about Covid-19.
Many retailers were reporting a drop in foot traffic as a result.
"Retail NZ is encouraging people in the Bay to get out and support local retailers, either in-person [while wearing a mask to stay safe] or online."
Tauranga Chamber of Commerce chief executive Matt Cowley said the region included Rotorua, where the lack of international and domestic tourism was having a more profound impact on the local economy than Tauranga.
"The staffing struggles, the supply chain disruptions, geopolitical uncertainty, and consumers tightly holding onto their wallets suggests New Zealand's economy is in for a tough year ahead.
"However, New Zealand's strong exporting sectors will likely hold the Western Bay economy in a relatively stronger position than other parts of New Zealand."
Westpac's acting chief economist Michael Gordon said New Zealand said many households reported their financial position had deteriorated in the past year, and a growing number expected their finances to come under pressure.
"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, he said increases in the prices of food and fuel have siphoned a large amount out of households' wallets, and "that is squeezing spending in other areas".
McDermott Miller Ltd market research director Imogen Rendall said women were considerably more pessimistic about their financial circumstances and the country's economic prosperity.
"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."
Confidence of people aged 18 to 29 had dropped below 100 for the first time since the start of the pandemic to 91.9 points.
"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."
While the confidence of people aged 50-plus dropped sharply by a further 11.7 points 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."
Sam Casey of My Ride Rotorua said the bicycle trade was in a "grey area".
"We've seen the slopes and ups of the past two years.
"Consumer confidence is down because isolating and everything has definitely slowed business down."
But, Casey said, fuel prices were pushing people towards bikes.
"Bikes are seen as toys as well. People who aren't travelling and have got money burning holes in their pockets will still buy bikes."
Rakai Jade owner and carver Lewis Gardiner said simple things like food and fuel prices were up.
"People are not so comfortable with their finances and that will have a bearing on what money is available at the end of the week."
Gardiner said how to boost consumer confidence in the face of uncertainty around key overheads was "the magic question".
"As a consumer myself I wouldn't spend as much money as I would have six months ago. There's a lot of things at play."
Griffin Surfboards owner Jordan Griffin said the whole country "got shut down for years".
"A lot of people are wary of where they're going to put their hard-saved money."
Griffin said consumers could grow in confidence if businesses were more transparent about where their products came from.
"My business has gone a little bit better because I manufacture surfboards right here in the Mount and I support other manufacturers by buying materials off them."
Additional reporting - Maryana Garcia
Survey interviews were conducted between March 1 to 17, 2022. The sample size was 1559.
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