Consumer confidence ranges in South Africa has plunged to -25 within the second quarter of 2022 because the native and world financial outlook sours within the wake of spiking inflation and the fallout from the Russia-Ukraine battle.
The newest FNB/BER Consumer Confidence Index (CCI) studying, revealed on Wednesday, is the worst in three many years, barring the preliminary Covid-19 laborious lockdown interval within the second quarter of 2020.
“Having already slipped from -9 to -13 index factors throughout the first quarter of 2022, the FNB/BER CCI plunged to -25 within the second quarter of 2022.
Bar the CCI studying of -33 within the second quarter of 2020 – when the sudden outbreak of the Covid pandemic and subsequent implementation of stage 5 lockdown pummelled sentiment – the present studying is the bottom in additional than 3 many years,” FNB notes in an announcement.
“Whereas official data shows that the growth in real consumer spending remained robust [3.2% year-on-year] during the first quarter of 2022, the dramatic deterioration in consumer sentiment now signals a marked slowdown in consumer spending in coming months,” it warns.
“The remarkable collapse of the CCI during the second quarter of 2022 can be ascribed to a major deterioration in the economic outlook sub-index of the CCI [from -18 to -39] and a complete turnabout in the household financial prospects sub-index [from +8 to -5].”
“The index measuring the appropriateness of the present time to buy durable goods [for example vehicles, furniture, household appliances and electronic goods] also edged down [from -28 to -32], indicating that consumers consider the present as an inappropriate time to purchase durable goods,” the most recent CCI report provides.
Meanwhile, a extra detailed breakdown of the CCI for Q2 2022 reveals that, whereas consumer confidence fell notably throughout all revenue teams, high-income confidence has soured greater than low-income confidence.
“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.”
“This reading is only 3 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,” the report highlights.
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Depressed customers all-round
“Although consumer sentiment is now very depressed across all three income groups, affluent consumers are considerably more downbeat compared to low-income households,” it provides.
“In January, the consumer worth inflation price breached the 6% higher vary of the South African Reserve Bank’s goal for the first time in 5 years and the prime rate of interest has been hiked by 75 foundation factors because the begin of the 12 months.
“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,” it provides.
According to FNB chief economist Mamello Matikinca-Ngwenya, the non-payment of the R350-per-month Social Relief of Distress (SRD) grant to 10.6 million South Africans in April and May in all probability additionally weighed on the confidence ranges of many low-income households.
“However, a substantial improvement in job creation in recent months and Sassa’s [South African Social Security Agency] 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 provides.
This article first appeared on Moneyweb and was republished with permission. Read the originals article here.
