Otago lost 20 points of confidence in the quarter and 27 points for the year to record 76 points in June, second-bottom of the 11 regions surveyed by Westpac and McDermott Miller.
Southland lost 19 points in the quarter and 28 in the year to record 73 points at the end of June, the bottom-ranked province.
The overall index fell 15 points to 82, where a reading below 100 indicates there are more pessimists than optimists and a reading above 100 indicates more optimists.
Westpac senior economist Donna Purdue said the index was at its third-lowest level in its 20-year history.
"Confidence has not been this low since the 1991 recession. The highly publicised rise in oil prices in recent months will be playing a key role in the feeling of doom and gloom."
Since the March quarter survey, oil prices had risen by around $US35 ($NZ46.30) a barrel, which had seen pump prices rise to an all-time high of $2.109 for 91 octane.
For the average household, that translated into an extra $430 a year just on petrol, she said.
It was not just oil that was causing pain for consumers.
Food prices had continued to rise, debt servicing costs were up sharply and consumers were facing the harsh reality of falling house prices.
At the same time, the unexpected decline in employment in the March quarter brought with it the realisation the labour market might not be 100% bullet proof, Ms Purdue said.
Among the good news was Fonterra announcing a much bigger-than-expected dairy payout for the 2007-08 season. The budget delivered a tax cut package worth $10.6 billion over the next four years and brought forward the indexation of working-for-families payments.
Those things should provide some welcome relief to cash-constrained households later this year, she said.
"In the meantime, there is plenty for consumers to be down about and they will continue to look for ways to cut back on spending."
The latest survey results came as no surprise to Otago Chamber of Commerce chief executive John Christie, who said Otago was developing two distinctly different economies.
"We have businesses out their doing very well and finding their biggest constraint to growth was finding skilled labour.
"Others are doing much worse and, obviously, they are in the retail sector. They are feeling the lack of consumer confidence."
Higher prices for food, energy and fuel, along with higher interest rates, were making it hard for households, he said.
For most households, the conversations around the dinner table were about how much harder it was to live these days.
Any cut back in household spending flowed on to the retailer.
The survey reported that Otago's consumer confidence has been affected by the recently-announced redundancies in Fisher and Paykel Appliances, Silver Fern Farms (formerly PPCS) and Tamahine Knitwear.
However, most of the Tamahine workers had found jobs, it was apparent Fisher and Paykel workers were wanted by other parts of the business community and some businesses had indicated a willingness to relocate to Dunedin to take up those skilled workers, Mr Christie said.
"It is easy to draw too much out of the statistics and not get to the reality of what's happening in the economy."
The confidence survey showed the biggest downward influence on confidence in the quarter came from a sharp deterioration in consumers' assessment of their current financial situation.
Ms Purdue said that of more importance was the hefty decline in expectations around their future financial position and perceptions of their purchasing power.
For the first time in 17 years, consumers on balance expected to be worse off financially next year.
"What's more, perceived purchasing power has taken a hammering.
"For only the second time in the 20-year history of the survey, the balance of consumers say it is a bad time to buy major household items.
"These responses suggest we should brace ourselves for continued weak spending."
A sample of 1556 interviews was undertaken in June for the survey, which has a margin of error of 2.5%.
