Consumer sentiment index

IBISWorld forecasts consumer sentiment to rise by 3.1 points in 2024-25, to average 90.3 index points. Nonetheless, the index will be in negative territory. High inflation has increased consumers' day-to-day expenditure, weighing on consumer sentiment. However, the likely easing of inflationary pressures in the current year has supported consumer sentiment. The high cash rate, which is expected to fall slightly in the current year, has caused interest payments on property and other debt to surge, further weighing on consumer expenses and, therefore, sentiment. These factors have hampered growth expectations domestically. As such, economic uncertainty has flowed through to reduced consumer sentiment.

The COVID-19 pandemic has had a significant effect on consumer sentiment. In April 2020, the index reached its lowest level since July 2008, when the global financial crisis placed significant downward pressure on consumer sentiment. In particular, consumer sentiment fell into negative territory over the two months through May 2020, coinciding with a strict government-mandated shutdown. While consumer sentiment returned to positive levels following the easing of Alert Level 2 restrictions in June 2020 and largely maintained an upward trend over the subsequent months, additional outbreaks and periods of increases in the Alert Level system continued to weigh on consumer sentiment.

Outside of the negative impacts of the COVID-19 pandemic, consumer sentiment remained positive during the past five years, up until October 2021. Prior to that, GDP growth had largely been solid, providing New Zealanders with a foundation for a positive financial and economic outlook. A depreciating New Zealand dollar over the past five years also kept prices of domestically produced goods relatively low in overseas markets, supporting export volumes. However, changing circumstances, mainly relating to inflation, interest rates, and geopolitical uncertainty stemming from wars, have caused the index to remain negative since October 2021. The index fell to a historic low of 73.8 points in December 2022. The increasing cost of living pressures and rising interest rates primarily drove this. Overall, IBISWorld forecasts consumer sentiment to fall at an average annual rate of 5.7 index points over the five years through 2024-25.