SA consumer confidence improves on brighter economic prospects

South African consumer confidence rebounded in the third quarter on perceptions that the economic outlook is improving, after inflation eased, growth surprised on the upside and the economy created more jobs.

A quarterly index measuring consumer sentiment climbed to -16 in the three months through September from -25 in the previous quarter, FirstRand’s First National Bank said in an emailed statement on Thursday. Despite the improvement, consumers’ willingness to spend wasn’t matched by an ability to spend, with the outlook for their household finances not changing much.

Households were buoyed by fewer electricity outages than anticipated during the survey period, coupled with their reduced dependency on state power utility Eskom for energy as they invested in alternative power sources.

An index measuring consumer sentiment about the economic outlook improved by 15 points to -22, according to the survey. The recovery was helped by high-income households being less pessimistic about the nation’s prospects, after the inflation rate fell to a two-year low in July and the economy expanded at double the rate expected by analysts in the second quarter.

“A sustained moderation in inflation, especially in food prices should start to relieve some of the pressure on retail sales volumes from the fourth quarter,” with projected interest-rate cuts providing greater impetus to consumer spending by mid-2024, FNB said.

“While the financial pulse of the nation remains weak, there appears to be some light at the end of the tunnel for consumers” said FNB Chief Economist Mamello Matikinca-Ngwenya. “Lower inflation should bolster the purchasing power of consumers somewhat towards the end of 2023.”