The Westpac Consumer Confidence index for New Zealand registered 90.90 in September 2025, a slight decline from 91.20 in June and below the 93.00 consensus forecast. This figure remains just under the 12-month average of 90.90, reflecting a broadly cautious consumer mood. The index has fluctuated significantly over the past two years, with a low of 80.20 in September 2023 and a peak of 97.50 in December 2024. The current reading suggests consumers remain wary amid ongoing monetary tightening and global uncertainties, despite a relatively stable domestic economic backdrop.

Drivers this month

• Rising interest rates contributed -0.15 points, dampening borrowing appetite.
• Stable employment conditions added 0.10 points, supporting confidence.
• Inflation concerns subtracted -0.05 points amid persistent price pressures.
• Geopolitical tensions in the Asia-Pacific region weighed -0.10 points.

Policy pulse

The Reserve Bank of New Zealand’s recent rate hikes have pushed the official cash rate to 5.50%, aiming to curb inflation near the 2% target. Consumer confidence remains below the neutral 100 mark, indicating that monetary policy is still exerting a tightening influence on household sentiment.

Market lens

Immediate reaction: NZD/USD slipped 0.30% in the first hour post-release, reflecting investor caution. Two-year government bond yields rose 5 basis points, signaling expectations of sustained monetary tightening.

Consumer confidence is a leading indicator of household spending, which accounts for roughly 60% of New Zealand’s GDP. The current index level of 90.90 suggests subdued but stable consumption growth ahead. Inflation remains elevated at 5.10% year-on-year, down from a peak of 7.30% in mid-2024 but still above the Reserve Bank’s target range. Unemployment stands at a low 3.40%, supporting wage growth and spending power. However, rising mortgage rates and tighter credit conditions are constraining discretionary expenditure.

Monetary Policy & Financial Conditions

The Reserve Bank’s tightening cycle, now in its 12th consecutive month, has raised borrowing costs significantly. Mortgage rates average 6.80%, up from 4.20% a year ago, pressuring household budgets. Credit growth has slowed to 3.50% annually, down from 6.10% in early 2024. Financial conditions remain restrictive, limiting consumer borrowing and dampening confidence.

Fiscal Policy & Government Budget

New Zealand’s government continues fiscal consolidation following pandemic-era stimulus. The 2025 budget projects a deficit of 1.80% of GDP, down from 3.20% in 2024. Spending on social welfare and infrastructure remains steady, but tax increases and spending restraint are expected to moderate disposable incomes, weighing on consumer sentiment.

External Shocks & Geopolitical Risks

Heightened geopolitical tensions in the Asia-Pacific, including trade frictions and supply chain disruptions, add uncertainty. Commodity price volatility and global inflationary pressures also impact New Zealand’s export-driven economy, indirectly influencing consumer confidence through employment and income channels.

Drivers this month

• Interest rate hikes: -0.15 points
• Employment stability: 0.10 points
• Inflation concerns: -0.05 points
• Geopolitical risk: -0.10 points

Policy pulse

The index remains below the neutral 100 threshold, consistent with ongoing monetary tightening. Inflation remains above target, and the Reserve Bank signals further hikes possible if inflation does not moderate.

Market lens

Immediate reaction: NZD/USD declined 0.30%, reflecting investor caution. Two-year NZ government bond yields rose 5 basis points, indicating expectations for continued monetary tightening.

Looking ahead, consumer confidence in New Zealand faces a mix of supportive and challenging factors. The labour market’s resilience and easing inflation provide a foundation for gradual improvement. However, elevated borrowing costs, fiscal tightening, and external uncertainties pose downside risks.

Bullish scenario (30% probability)

• Inflation falls rapidly below 3%, enabling rate cuts by mid-2026.
• Consumer confidence rises above 100, spurring stronger consumption growth.
• Global trade stabilizes, supporting export incomes and employment.

Base scenario (50% probability)

• Inflation gradually declines to 2.50% by late 2026, with stable rates.
• Consumer confidence hovers near 90-95, supporting moderate spending.
• Fiscal consolidation continues, limiting disposable income growth.

Bearish scenario (20% probability)

• Geopolitical shocks or global recession trigger renewed inflation spikes.
• Consumer confidence falls below 85, contracting household spending.
• Financial market volatility disrupts credit availability and asset prices.

The Westpac Consumer Confidence index for New Zealand remains a vital barometer of household sentiment amid a complex macroeconomic backdrop. The slight decline to 90.90 in September 2025 reflects ongoing caution as monetary policy tightens and external risks persist. Historical trends show the index’s sensitivity to inflation and interest rates, underscoring the importance of price stability for consumer mood. Forward-looking scenarios highlight a balanced risk profile, with moderate recovery possible but downside risks from geopolitical and financial shocks. Policymakers and market participants should monitor this indicator closely as a leading signal for domestic demand and economic momentum.

Key Markets Likely to React to Westpac Consumer Confidence

The Westpac Consumer Confidence index influences several key markets in New Zealand and globally. Consumer sentiment directly affects domestic consumption, credit demand, and investment decisions. Markets sensitive to interest rates, currency fluctuations, and equity valuations tend to react promptly to changes in this indicator.

• NZDUSD: The New Zealand dollar often moves in tandem with consumer confidence, reflecting shifts in economic outlook and monetary policy expectations.
• NZX50: New Zealand’s benchmark equity index responds to consumer spending trends and economic growth prospects.
• NZBNZ: Bank stocks are sensitive to credit growth and interest rate cycles, both linked to consumer confidence.
• BTCUSD: Bitcoin’s risk sentiment correlation means shifts in consumer confidence can indirectly impact crypto market flows.
• AUDNZD: The cross-currency pair reflects relative economic strength and consumer sentiment between Australia and New Zealand.

FAQs

What is the Westpac Consumer Confidence index?

The Westpac Consumer Confidence index measures New Zealand households’ sentiment about the economy, spending, and financial conditions. It is a leading indicator of consumer spending trends.

How does consumer confidence affect the NZ economy?

Consumer confidence influences household spending, which drives about 60% of New Zealand’s GDP. Higher confidence typically leads to increased consumption and economic growth.

Why is the Westpac Consumer Confidence index important for investors?

Investors use the index to gauge economic momentum, anticipate central bank policy moves, and assess risks to financial markets, including currency and equity valuations.

Final takeaway: The September 2025 Westpac Consumer Confidence reading of 90.90 signals cautious but stable household sentiment amid tightening monetary policy and global uncertainties. Monitoring this index will be critical for anticipating New Zealand’s economic trajectory and financial market responses in the months ahead.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.