Consumer confidence in South Africa remained fairly deep in negative terrain and could deteriorate further early in the new year on the back of prevailing Omicron Covid variant.
According to the FNB, consumer sentiment has remained depressed due to soaring fuel prices, the resumption of rolling blackouts, further job losses and the threat of a fourth wave of Covid-19 infections.
The FNB/BER Consumer Confidence Index (CCI) released yesterday showed that confidence edged up slightly, from -10 to -9 index points, during the fourth quarter of 2021.
However, at -9 index points, the CCI remained well below the average CCI reading of +2 points and therefore still pointed to low levels of consumer confidence.
FNB senior economist Siphamandla Mkhwanazi said that consumers were faced with a “welter of conflicting signals” during this period, as household incomes and Covid-19 relief measures declined.
Mkhwanazi said confidence levels had, however, been boosted by a drop in infection rates to the lowest levels in nearly 18 months in the first half of November, with economic activity in the hospitality sector continuing to recover.
“However, adverse developments such as soaring fuel prices, increased load-shedding, strikes, supply chain disruptions and stock shortages have started to weigh on South Africa's economic growth prospects and are preventing a stronger rebound in sentiment,” he said.
The FNB survey showed that the marginal increase in the CCI during the fourth quarter could be ascribed to small improvements in the economic outlook and household financial position sub-indices.
However, FNB noted that consumers remained pessimistic about the appropriateness of the present time to buy durable goods such as vehicles, furniture, household appliances and electronic goods.
A recent poll commissioned by leading on-demand pay provider, Floatpays, also revealed that almost 50 percent of South African employers will not be issuing 13th cheques as they continue to face financial pressures exacerbated by a struggling economy amidst the Covid-19 pandemic.
Consumers appear to have resolved to hold on to the little money they have as the Black Friday sales also did not entice them sufficiently .
A breakdown of the CCI per household income group showed that the confidence levels of high-income households remained unchanged, while middle- and low-income confidence edged up slightly.
Heading into the festive season, the confidence levels of all three income groups were at broadly similar negative levels.
Mkhwanazi said the uncertainty surrounding Omicron, ensuing travel bans and the looming fourth wave of Covid-19 would likely depress consumer confidence even further.
He said that whereas international travel restrictions typically affect the sentiment of affluent consumers, low- and middle-income households would arguably suffer the most.
“[Especially] in terms of job creation and income prospects if the expected bumper tourist season does not materialize and lockdown restrictions once again hammer the hospitality sector during the holidays,” Mkhwanazi said.
“The shift in consumer spending away from retail goods towards the services sector will likely slow, and grocery and furniture retailers will continue to win out over tourism, restaurants and entertainment services.”
BUSINESS REPORT ONLINE