Consumer confidence remains flat but things might be looking up
By Sunita Menon - Jan 24th, 13:27
Consumer confidence remained at its 2018 low of 7 in the fourth quarter of 2018.
The consumer confidence index, compiled by FNB and the Bureau for Economic Research at Stellenbosch University said: “Consumer sentiment settled at a much lower level during the second half of 2018 compared to the extraordinarily positive numbers booked at the height of Ramaphoria.”
This, however, is still above the long-run average reading for the CCI of 2 and higher compared to the low levels recorded between 2015 and 2017.
This suggests that most consumers are fairly optimistic that the outlook for the South African economy and their own household finances will improve during the next 12 months, FNB said.
The index plummeted to the lowest level for the year in the third quarter, after it surged to record highs when Cyril Ramaphosa took over the presidency at the beginning of 2018
Consumers were hard hit by the first VAT hike in almost two decades and incremental fuel price increases in 2018.
The index looks at consumer attitudes and expectations and is used to evaluate economic trends and prospects. Respondents are asked about the expected performance of the economy, the expected financial position of households and the rating of the appropriateness of the present time to buy durable goods such as furniture, appliances and electronic equipment.
The economic outlook and the household financial prospects subindices both improved. The index tracking whether consumers expected an upturn in the economy over the next year increased from 9 to 14, while the net majority of consumers anticipating an improvement in their household finances in 12 months’ time rose from 13 to 15.
This, however, was offset by a notable deterioration in consumers’ assessment of the appropriateness of the present time to buy durable goods such as vehicles or furniture. That subindex declined from zero to -7.
“This suggests that the growth in retail sales and consumer spending in general probably remained constrained during the fourth quarter of 2018,” FNB chief economist Mamello Matikinca-Ngwenya said.
“Looking ahead, the sharp drop in fuel prices and possible further decline in February should bring long-awaited budgetary relief to many households and simultaneously reduce the pressure on the Reserve Bank to implement further interest rate hikes to counter rising inflation,” she said.Business Live
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