Consumer confidence plunges

SA consumer confidence plunged to its lowest level in about year in Q1 of 2023.

The latest Fnb/bureau for Economic Research (BER) survey, released on Thursday, shows the effect of the deepening power and cost-of-living crises on the economy.

The survey provides regular assessments of consumer attitudes and expectations and is used to evaluate economic trends and prospects.

The FNB/BER consumer confidence index (CCI) plunged to -23 from -8, the lowest point since Q2 of 2022, when floods hit Kwazulunatal and the world was coming to terms with the effects of the invasion of Ukraine.

The reading of -23 is the third lowest CCI reading on record since 1994. It illustrates consumer concern about their household finances and SA’S economic prospects.

Most consumers expect growth to deteriorate over the next 12 months and consider it highly inappropriate to purchase durable goods such as cars or furniture at present.

“The alarming increase in power outages since December and the concomitant deterioration in SA’S economic prospects no doubt rocked consumer sentiment during the first quarter,” FNB chief economist Mamello Matikinca-ngwenya said.

“Spiralling food prices, another interest rate hike and a sharp depreciation in the rand exchange rate likely added insult to injury.

“However, further job creation in the stillrecovering services sector may have softened the blow to low- and middle-income confidence.”

It is the confidence levels of high-income households — those earning more than R20,000 a month — that deteriorated the most during Q1, crashing from -10 to -31 index points.

Affluent consumers were especially concerned about the economic outlook, with the subindex nosediving from -18 to a new historic low of -51 .

The confidence levels of middle-income households — R5,000 to R20,000 a month — dropped from -6 to -21.

Low-income confidence (less than R5,000) fell from -6 to -17.

With an increasing number of high-income households now investing in solar power and other backup power systems, these households will in all likelihood need to slash their discretionary spending to balance their budgets, the survey found.

Consequently, sales volumes of big-ticket durable goods items such as new vehicles, furniture and household appliances are likely to be under pressure in coming months.