The Consumer Confidence Index (CCI), compiled by First National Bank and the Bureau for Economic Research (BER), has recovered all the ground lost during the first half of 2022 to reach the same level recorded during the 2021 festive season.
Although still relatively weak after recovering from -20 to -8 index points during the fourth quarter (Q4) of 2022, it remains a pronounced recovery considering that the CCI was measured at -25 at the end of Q2.
In a statement following the release of the latest CCI reading, FNB/BER said the latest reading brought the CCI more or less in line with the level attained during Q4 last year (-9), as well as Q4 2019 (-7, just before the Covid-19 pandemic struck).
“Even though a reading of -8 still signifies depressed consumer sentiment, the scope of the rebound relative to the third quarter comes as a surprise given sustained high inflation, frequent load-shedding, successive large interest rate hikes, and the worsening global economic backdrop.”
Going into further detail, FNB/BER said all three sub-indices of the CCI had rebounded “smartly” during the fourth quarter.
“The economic outlook and time-to-buy durable goods sub-indices of the CCI improved by 12 and 11 index points respectively, but remain deep in negative territory.
“The majority of consumers therefore still expect a deterioration in South Africa’s economic prospects over the next 12 months and consider the present time as inappropriate to purchase durable goods (e.g. vehicles, furniture, household appliances and electronic goods).
“The household financial outlook sub-index of the CCI jumped 15 index points to reach +13 during the fourth quarter, a similar reading compared to the +14 reached during the 2021 festive season. The majority of households therefore expect an improvement in their household finances over the next 12 months, despite being quite pessimistic about the outlook for the national economy.”
The latest CCI comes as some respite from stage six load-shedding implemented at midnight by power utility Eskom.
Tied in with positive GDP growth figures released earlier this week, it creates an impression of economic recovery for South Africa, which is all somewhat abstract as the man on the street is still feeling the pinch of rising inflation, upwardly adjusted lending rates, and rising fuel costs – especially petrol – in a country that seems to be teetering on the edge of collapse.
Although it should be widely received as good news that President Cyril Ramaphosa has declared December 27 to be a public holiday because Christmas Day falls on a Sunday, it will doubtless cost the country’s ailing economy.
With some R3 billion in potential gains being lost every day to load-shedding at the moment, the first set of GDP figures at the end of Q1 in 2023, and subsequent CCI reading, will most likely sketch a different picture.
