Inflation expectations hit recent highs
New Zealand consumer confidence dropped sharply in March, falling nearly nine points as escalating conflict in the Middle East rattled households and pushed fuel prices and inflation expectations higher, according to a new report by ANZ Research.
The ANZ–Roy Morgan Consumer Confidence Index fell from 100.1 in February to 91.3 in March. The decline reversed a months-long recovery that had seen confidence climb from 92.0 in August 2025 to a recent high of 107.2 in January 2026.
“The conflict in the Middle East has created significant uncertainty for the economic outlook and is hitting people in the back pocket already,” ANZ Research said in the report.
The survey, which polled 1,009 New Zealanders during March, found confidence deteriorated steadily as the month progressed, coinciding with escalating tensions abroad and rising fuel costs at home.
The future conditions index – which captures forward-looking sentiment – fell from 106.9 to 96.7, returning to October 2025 levels. The current conditions index dropped from 90.0 to 83.1, a decline ANZ attributed in part to rising petrol prices.
New Zealanders’ short-term economic outlook turned notably darker. A net 25% of respondents expected bad economic conditions over the next 12 months, down 17 points from the previous month’s net -8%. The proportion expecting good times over the next five years edged down 2 points to a net 5%.
Household spending intentions also weakened. The proportion of respondents who considered it a good time to buy a major household item – regarded as the survey’s best retail indicator – fell 10 points to a net -14%, returning to levels last seen in October 2025.
Personal financial sentiment deteriorated as well. A net 20% of respondents said they were worse off financially than a year ago, down four points from February. Looking ahead, only a net 10% expected to be better off in the next 12 months, a 10-point fall.
Two-year-ahead inflation expectations jumped a full percentage point to 5.7%, the highest reading in recent months, while house price inflation expectations lifted marginally from 3.6% to 3.8%.
Despite the decline, ANZ noted New Zealand remained considerably more confident than Australia, where consumer sentiment has been fragile for some time.
ANZ said its upcoming card spending report would shed further light on how households are adjusting their spending in response to the uncertainty.
