South Africa’s consumer confidence index fell to minus 7 in the third quarter, down from 5 in the previous three-month period, owing to worsening growth outlook, the First National Bank (FNB) said in a statement released on Tuesday.
The index is the lowest since the fourth quarter of 2017 when it slumped to minus 8.
“A confluence of adverse economic developments in all likelihood contributed to the slump in consumer sentiment, including rapidly rising unemployment, declining real per capita incomes, news of a further massive 59 billion rand (about 4 billion U.S. dollars) government bailout to Eskom, and an upsurge in xenophobic violence in South Africa,” said FNB economist Siphamandla Mkhwanazi.
Last week, Statistics South Africa put the unemployment rate at 29.1 percent.
Mkhwanazi said the positive consumer confidence that President Cyril Ramaphosa brought after taking office is declining.
The consumers are concerned about their household finances and have reduced buying durable goods, he said.
“The rand has depreciated notably in recent months, while the South African Reserve Bank’s decision to keep the main policy interest rate unchanged in September may have disappointed indebted consumers that were hoping for another interest rate cut,” Mkhwanazi said.
“Consumers may also be suffering from some post-election blues,” he said. “Consumer confidence increased during each of South Africa’s four previous election quarters, but then declined somewhat again during the quarter following the election.”
“The decline in consumer confidence during the third quarter signals a further deterioration in consumers’ willingness to spend, especially among the higher income groups,” Mkhwanazi said.
Retailer confidence in particular took a major hit during the third quarter. An alarming 83 percent of retailers surveyed said that they were dissatisfied with prevailing business conditions during the third quarter, up from 72 percent in the second quarter. Enditem