Consumer confidence has continued to slide, particularly in rural and provincial New Zealand.
The latest Westpac McDermott Miller Consumer Confidence Index showed the index fell to 114.8 in the three months ended December 11, down from 116.7.
It was the lowest reading since March 2013 when it was 110.8.
Westpac chief economist Dominick Stephens said yesterday prospects for a low dairy payout this season had taken their toll.
''For the time being, falling petrol prices and lower mortgage rates appear not to have registered as a positive in consumers' minds.
"Even in the main cities, consumer confidence remained steady, rather than rising.''
Retailers would find some solace in the fact consumers' spending intentions had held steady.
Consumers might be feeling less optimistic but they were not tightening their belts just yet, he said.
The survey was conducted between December 1 and 11, with a sample size of 1557.
An index number above 100 indicates optimists outnumbering pessimists.
All the component questions of the index fell, Mr Stephens said.
The percentage of respondents saying now was a good time to buy a major household item fell the least, from a net 26.1% to 25.8%, just below the historical average.
Consumer expectations for the wider economy fell further, with the percentage feeling optimistic for the year ahead falling to a net 16.5% - the lowest since September 2014.
Optimists for the next five years fell to a net 27.2%, the lowest since December 2012.
Respondents also felt less positive about their own financial situation.
A net 3.1% said their financial situation had deteriorated over the past year and a net 7.9% expected it to improve over the year ahead, down from 10.25%, Mr Stephens said.
The index results showed consumer confidence among those employees in the private sector fell in December to 118.6 from 122.6 in September.
Consumer confidence remained higher in the private sector than in the public sector, where confidence remained at 114.2.
McDermott Miller forecasting director John McDougall said the most frequent reason consumers felt worse off than last year was living costs rising faster than income.
Among those expecting to be better off in a year's time, the most frequent reason was an expected rise in salary or wages, followed by an expected improvement in financial commitments.
The main reason for expecting good economic times over the next year continued to be belief in the effectiveness of government economic policy at 32%, he said.
''Interestingly, those expecting bad economic times also tend to ascribe it to government policy.''
Between the September and December quarters, there was a near doubling of those expecting bad economic times because of a poor outlook for farming.
Concern about the fall in dairy prices was the underlying cause.
A poor outlook for farming was the most cited reason among private sector employees for expecting bad economic times over the next year, with 32% giving that reason compared with only 15% of public sector employees, Mr McDougall said.
Glass half empty
• Consumer confidence has fallen further, particularly in rural and provincial New Zealand.
• Consumer confidence index reached a peak of 121.7 in March, fell to 116.7 in September and fell further to 114.8 in December.
• Consumers in the main urban centres are feeling more upbeat but less so than expected given falling petrol prices and mortgage rates.
• This goes against the grain of other evidence of the non-farm economy accelerating in recent months.
