Consumer confidence in South Africa drops to historic lows: index
Despite the lifting of almost all Covid restrictions and improved business sentiment, the FNB /BER Consumer Confidence Index (CCI) plunged to -25 in the second quarter of 2022, having already slipped from -9 to -13 index points during the first quarter of 2022.
.“Having already slumped from -11 to -18 index points in the first quarter, the confidence level of high-income households (earning more than R20,000 per month) crashed to -30 in the second quarter.”“Although consumer sentiment is now very depressed across all three income groups,
FNB noted that the decline in optimism among the middle-class can be partly attributed to rising inflation and significant interest rate hikes since the start of the year.“However, a substantial improvement in job creation in recent months and Sassa’s commitment to resume the SRD grant payments at the end of June – as well as to catch-up all missed payments from July – probably prevented an even more pronounced decline in low-income confidence during the second quarter,” she said.
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It has been low since 1994
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Consumer confidence surveys provide regular assessments of consumer attitudes and expectations and are used to evaluate economic trends and prospects.Health Dept to Challenge Ruling on Where Doctors Work The high court in Pretoria has overturned the health department's control of where doctors work, declaring the National Health Act's issuing of"certificates of need" to healthcare establishments, unconstitutional and invalid.Analytico has released its 2022 South African Broadband and ISP Brand Report, providing insights into South Africa’s fibre, ISP, and mobile data markets.on’s Global Food Price Index in May averaging 157 points , which is up 22% year-on-year, coming from a record high seen in March.
The surveys are designed to explore why changes in consumer expectations occur and how these changes influence consumer spending and saving decisions. Bar the CCI reading of -33 in the second quarter of 2020 – when the sudden outbreak of the Covid pandemic and subsequent implementation of level 5 lockdown pummelled sentiment – the current reading is the lowest in more than three decades . No Clarity Yet on East London Tavern Tragedy Despite several eye witness accounts, there are still no official answers on the cause of death of 21 young people - between 13 and 20 years - at . A breakdown of the CCI per household income shows significantly different results, with South Africa’s wealthy and middle-income earners significantly less hopeful than the country’s low-income earners.5 billion in 2021, while mobile data revenue was R53. “A more detailed breakdown of the CCI shows that, while consumer confidence fell notably across all income groups, high-income confidence has soured more than low-income confidence since the end of 2021,” FNB said. The youngsters were reportedly attending an end of the exam party. “Having already slumped from -11 to -18 index points in the first quarter, the confidence level of high-income households (earning more than R20,000 per month) crashed to -30 in the second quarter. These could remain elevated, in line with our expectations of agricultural commodity prices.
” This reading is only three index points north of the historic low of -33 recorded for this sub-index in the second quarter of 2020, with the vast majority of affluent households now anticipating a deterioration in their household finances and, in particular, in South Africa’s economic growth rate, FNB said, “Similarly, the confidence level of middle-income households (earning between R2,500 and R20,000 per month) slumped from -11 to -23, while low-income confidence (consumers earning less than R2,500 per month) declined from -6 to -16 index points. Beware July - Another Petrol, Interest Rate Hike On the Way There is no reprieve for South African consumers as the price of petrol is set to increase sharply again in July - reportedly by R1. Analytico’s 2022 South African Broadband and ISP Brand Report helps telecoms companies with their strategy by providing valuable insights into what consumers think. “Although consumer sentiment is now very depressed across all three income groups, affluent consumers are considerably more downbeat compared to low-income households. ” FNB noted that the decline in optimism among the middle-class can be partly attributed to rising inflation and significant interest rate hikes since the start of the year. The Reserve Bank is reportedly looking at another interest rate hike in an endeavour to curb rising inflation. “Whereas spiralling food and fuel prices are probably of primary concern to less affluent households, the prospects of further steep interest rate hikes and sinking share prices on the JSE would have compounded the inflationary pressures when it comes to middle- and high-income households. Consumers are split by technical knowledge and location, revealing important trends that companies can use to their advantage in their marketing.” FNB chief economist Mamello Matikinca-Ngwenya noted that The non-payment of the R350 per month social relief of distress (SRD) grant to 10.50 fuel levy reprieve to assist citizens already overburdened by rising food and transport costs. Still, this will be dependent on the cattle and sheep slaughtering activity, which for now remains robust, with 197 712 head of cattle slaughtered in April 2022 (-2% year-on-year), and 318 155 head of sheep slaughtered in the same month (-10% year-on-year).
6 million South Africans in April and May in all likelihood also weighed on the confidence levels of many low-income households. “However, a substantial improvement in job creation in recent months and Sassa’s commitment to resume the SRD grant payments at the end of June – as well as to catch-up all missed payments from July – probably prevented an even more pronounced decline in low-income confidence during the second quarter,” she said. For more information about the report, visit the. Cause for alarm Although consumer sentiment was widely expected to weaken further given the worsening inflation and interest rate outlook, the extent of the drop in consumer confidence is alarming, Matikinca-Ngwenya said. “Save for the panicked level 5 lockdown period during the initial outbreak of the Covid pandemic in South Africa, the FNB/BER CCI is now at its lowest level in 35 years . “While household consumption expenditure still surprised on the upside in the first quarter of 2022, the dramatic deterioration in confidence points to a sudden slump in consumers’ willingness to spend and foreshadows a significant slowdown in real consumer spending growth relative to the strong first quarter.5% in 2021).
“Even though consumers are likely to tighten their purse strings, the surprisingly large fall in the CCI could signify somewhat of an overreaction to recent developments and may not translate into an equally large contraction in consumer spending,” she said. “Positive developments such as the scrapping of all remaining Covid-19 regulations – including the wearing of masks, limits on gatherings and border checks – a gradual recovery in job creation and the back payment of missed SRD grants could counter some of the mounting inflationary and interest rate pressures. “Savings accumulation among affluent consumers over the last two years should also underpin spending by high-income households. Nevertheless, the combination of soaring food and fuel prices and increased wariness among consumers will no doubt see a realignment of consumer budgets.” Households will likely start to draw on savings and slash their discretionary spending – especially on big-ticket durable goods – to buttress purchases of basic necessities and support the recovery in spending on clothing, restaurants, recreation and entertainment following the lifting of Covidrestrictions, she said.