BER: Festive cheer fails to buoy consumer mood

Consumer confidence in South Africa has taken a sharp dive heading into the festive season, reaching its lowest level in more than two decades according to the latest FNB BER Consumer Confidence Index. The index, which dropped to minus 17 points in the fourth quarter from minus 16 points in the third quarter, paints a bleak picture of consumer sentiment as the country grapples with economic challenges. Lisette Ijssel de Schepper, Senior Economist at the Bureau for Economic Research, highlighted that the current level of consumer confidence is even lower than during the initial stages of the COVID-19 pandemic. This downward trend in consumer sentiment reflects concerns about the economy and the ability of households to make significant purchases such as furniture and cars. The gloomy outlook is primarily driven by pessimism surrounding the state of the South African economy, with consumers expressing apprehension about future economic conditions. Despite an overall decrease in confidence, lower-income households showed a slight improvement in sentiment, potentially due to the extension of COVID relief social grants. However, higher-income and middle-class households experienced a decline in confidence, raising questions about their ability to weather potential tax hikes and economic challenges. Looking ahead, the first half of 2024 is expected to remain challenging for consumers, with inflationary pressures and rising costs posing additional strains on already constrained budgets. While there is hope for a turnaround in consumer confidence later in the year, dependent on factors such as interest rate cuts and lower inflation, the immediate future looks uncertain for South African consumers. As households navigate a subdued festive season and brace for financial headwinds in the new year, the focus remains on managing expenses and adapting to changing economic conditions.