South Africa's consumer confidence rises despite economic uncertainty, survey shows
South Africa's consumer confidence improved in the third quarter, a survey showed on Thursday, although consumer spending is expected to remain subdued in the coming months due to uncertainty stemming from the war in the Middle East.
The consumer confidence index, sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, improved to minus 13 points from minus 19 in the second quarter.
The Middle East conflict, which is now in its seventh month, has put pressure on South African household budgets through higher fuel prices, uncertainty over interest rates and fears of inflation.
"Shoppers will likely remain cost-conscious and prioritise necessities over discretionary spending in the run-up to the festive season, suggesting that consumer spending growth will remain muted and that value-for-money retailers may outperform higher-end brands," FNB Chief Economist Mamello Matikinca-Ngwenya said.
The rebound in the quarter was largely driven by stronger confidence among lower-income households, which were more insulated from recent interest rate hikes and benefited from lower food inflation, the survey showed.
The interest rate hike announced by the central bank in May has disproportionately affected middle- and high-income consumers due to a greater exposure to formal sector bank credit and higher spend on durable goods purchases, Matikinca-Ngwenya added.
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