OTTAWA - Consumer confidence fell sharply in March in most of the country amid rising oil prices and concerns that the economic recovery was struggling, the Conference Board of Canada said Tuesday.
In its monthly report, the Conference Board said consumer confidence index fell to 83.7 from 89.3 in February. That put March's confidence reading lower than in the same month of 2010 but higher than six months ago.
The drop in consumer confidence this month came amid a backdrop of volatile oil prices as a result of unrest in the Middle East and North Africa. In New York, the price of a barrel of oil traded above US$104 a barrel on Tuesday.
The price of gasoline at the pump averaged $1.236 per litre in Canada, up from $1.178 a month ago and $1.031 at this time last year.
"Higher energy costs are really affecting how people view their situation right now," Todd Crawford, an economist with the Conference Board, said Tuesday.
"When we see oil prices shoot up like that over a very short period of time, that means higher energy bills for the average Canada and that translates immediately to the bottom line."
The Canadian economy also disappointed in February, creating a smaller than expected 15,100 new jobs that included an outright decline in full-time work. Part-time jobs accounted for all the gains and more, increasing by 38,900 during the month.
The Conference Board said confidence fell in four out of five regions, with Quebec showing the only increase. Ontario saw the largest drop, bringing it to the lowest level in the country.
Crawford noted the increase in Quebec was due to an increased number of people who believe it's a good time to make a major purchase such as a new home, a particularly volatile indicator.
"We would hesitate to make a conclusions just on this one month," Crawford said.
Weaker consumer confidence could make the economy a more important factor in the May 2 federal election campaign as voters look more carefully at the major parties and their economic platforms.
The board said attitudes towards current finances were "worrisome," as about a quarter of Canadians -- 2.4 percentage points more than last time -- said their finances had worsened over the last six months.
The report noted that although sentiment current finances has improved moderately since the recession, the balance has remained negative for 30 consecutive months.
Less than one per cent more people said their finances got better, compared with those surveyed in February, while one in five Canadians said they expect their finances to worsen in the next six months.
Crawford noted that one month does not make a trend.
"This month does represent a significant detraction in confidence, but it had been trending up strongly over the prior six months," he said.
"You certainly wouldn't want to jump to conclusions on just one month of data, but there are still plenty of concerns out there."
Along with the cost of gasoline rising and the uncertain pace of economic recovery, consumers are also worried about food price inflation and the impact of rising interest rates on high consumer debt.
If Canadians get increasingly nervous about their finances, consumers could tighten their spending, weakening the domestic economy and making it more difficult to get the kind of sustained job creation needed for further drops in the jobless rate.
The survey, based on more than 2,000 telephone interviews, was conducted between March 4 and 13, and has a margin of error of plus or minus 2.2 percentage points.
