Southland Chamber of Commerce says locals are spending less due to continuing uncertainty over the future of the Tiwai Point smelter.
In August last year, owner New Zealand Aluminium Smelters said the plant was losing money and renegotiating the price it pays Meridian Energy for electricity was crucial to its future.
Since then, $70 million in planned capital expenditure has been put on hold, 100 jobs have been cut. Power price negotiations are continuing.
Southland Chamber of Commerce chief executive Richard Hay said worries over the plant's future are in the forefront of people's minds when it comes to spending, and the uncertainty is affecting consumer confidence.
State Owned Enterprises Minister Tony Ryall said this is a commercial matter between Meridian and its longstanding customer.