Results from The Conference Board® Global Consumer Confidence Survey*, conducted in collaboration with Nielsen, revealed that the outlook for Australian consumers is still relatively austere compared to New Zealanders. Australian consumer confidence was at 93 in the second quarter of 2018 – 11 points below the global benchmark. However, consumer confidence improved over the past year (up 4 points versus Q2, 2017) driven by positive gains in the area of job prospects. Confidence in New Zealand remained high at 104 due to wage inflation, although the index recorded a minor slip of one point compared to the same time in 2017 – driven by a slight decline in all three confidence indicators.
The survey also revealed that there are a growing number of consumers across the Pacific who are feeling the pinch of rising fuel prices. Seventeen percent of Australian consumers said fuel prices were a major concern (up 14 percentage points compared to the same quarter in 2017). While mounting concern levels were even more stark in New Zealand, with fuel prices now the number one concern among Kiwis at 28% – a significant jump of 24 percentage points versus the previous year.
Rising fuel prices ranked within the top three concerns across Australia and New Zealand for the second quarter of 2018; previously it had consistently been ranked at the lower end of the list with only 3-4% of Pacific consumers listing it as a concern.
RISING FUEL PRICES RANKED WITHIN THE TOP THREE CONCERNS IN AUSTRALIA AND NEW ZEALAND FOR THE SECOND QUARTER OF 2018.
In Australia, national fuel prices are the highest they have been since 2015 driven by the exchange rate and higher international oil and petrol prices, according to a recent report revealed by the ACCC. And these rising fuel prices appear to have affected overall in-store sales for the Australian petrol and convenience channel with annual dollar sales down by -15.6% in the year ending 22 July 2018. Beverages, in particular, have been the hardest hit with annual dollar declines recorded for sports and energy drinks (-6.8%); soft drinks (-19%); and mineral/still/spring water (-11.6%).
Across the Tasman Sea, while there has been no visible impact on in-store sales across New Zealand’s petrol and convenience sector yet, all eyes are on the channel to see what effect the national fuel tax will have once it takes place in October this yet. The rising level of consumer concern suggests that the impact on impulse sales in the channel could be significant.
The next 12 months could see some big shifts in confidence across the Pacific. In Australia, economic uncertainty and volatility with the recent change in Prime Minister, as well as rising fuel prices, and increased food prices in response to the drought is likely to result in consumers reigning in their spending.
While in New Zealand, business confidence dipped to a 10-year low with increased concerns about minimum wage increases, new restrictions on foreign investment and a ban on offshore oil and gas exploration. Retailers are especially pessimistic, as much of the burden of the minimum wage change will fall on their sector. The regional fuel tax will place further pressure on FMCG players as the resulting higher supply chain costs will need to either be absorbed or passed on to consumers.
*The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen. The survey is conducted quarterly and looks at understanding consumer sentiment around the world regarding consumers’ outlook on the economy, job prospects, financial outlook, their biggest concerns and spending and saving intentions.