Consumer confidence slides deeper into negative territory
By Robert Laing - Jul 12th, 11:52
South African consumer confidence worsened to -9 in the second quarter of 2017 from -5 in the first quarter, a First National Bank (FNB) sponsored survey done by Stellenbosch University’s Bureau for Economic Research (BER) found.
Results for both the first and second quarter were released on Wednesday morning. The first quarter results were delayed by a switch in market research firms, the BER said.
Consumer confidence has been negative for three years, its longest pessimistic streak since the index was launched in 1982.
The BER attributed the index perking up to -5 from negative -10 in the fourth quarter of 2016 on the hope of better agriculture production in the summer rainfall areas, a moderation in inflation and tentative signs of an economic upturn taking hold in advanced economies.
These hopes were dashed in the second quarter due "to the confidence shock in the wake of the sovereign credit downgrades following the Cabinet reshuffle at the end of March, and news that the South African economy has entered a recession", the BER said.
"Despite the recent deceleration in food inflation, food prices remain very high and will continue to dampen the real purchasing power of consumers, especially for low-income households," FNB economist Jason Muscat said.
"Extraordinarily weak business confidence levels — currently at the lowest level since 2009 -— will keep a firm lid on household credit extension in coming months. Bar a swift, confidence-inspiring change to SA’s current political landscape, consumer spending is likely to remain depressed during the remainder of 2017."
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