Consumer confidence plunges as South Africa faces economic headwinds

South Africa’s consumer confidence took another knock in the third quarter of 2025, with the FNB/Bureau for Economic Research (BER) Consumer Confidence Index (CCI) falling from -10 to -13, sparking renewed concern about the outlook for household spending and economic growth.

Although still above the exceptionally weak first-quarter reading of -20, when a host of negative shocks hit sentiment, the Q3 figure remains well below the relatively upbeat levels recorded in the second half of 2024.

Since 1994, the average CCI has stood at -1, highlighting how deeply negative current sentiment is.

The deterioration was driven mainly by a sharp fall in confidence among middle-income households, which dropped from -7 to -16. Both the household finances and economic outlook sub-indices weakened, slipping from 9 to 3 and from -18 to -22 index points respectively.

Sentiment worsened on both the economic and household financial outlook, while the suitability of the present time to buy durable goods remained in deeply negative territory, at -20, barely changed from Q2.25’s -21, interest rate cuts since 2024.

FNB chief economist Mamello Matikinca-Ngwenya described the uptick in low-income household sentiment as “somewhat surprising,” given recent food price increases that usually erode poorer households’ purchasing power.

However, she said that above-inflation increases in social grants are likely helping low-income households to make ends meet.

Furthermore, Matikinca-Ngwenya said the improved third quarter reading for low-income confidence also compares to a particularly weak second quarter, when more than a hundred people lost their lives in the Eastern Cape floods.

“While Two-Pots pension fund withdrawals likely faded during the third quarter and higher personal income taxes started to bite, another 25-basis point interest rate cut brought welcome debt service cost relief to more affluent consumers,” she said.

“The strong performance of share prices on the JSE and the appreciation in the exchange rate of the rand may also have underpinned the confidence levels of high-income households. In contrast, weak job creation, rising inflation and dwindling two-pot funds have likely started to weigh on the confidence levels of the middle class.”

Professor Waldo Krugell, an economist at North-West University, said the figures add to mounting evidence of strain in the economy.

“Despite a relatively low inflation rate and earlier repo rate cuts, consumers are under pressure and it will have an impact on their spending which means weaker demand for retail, restaurants, and local tourism,” he said.

“Overall, the index is below the long-term average and too deep in negative territory.”

Unisa economist Dr Eliphas Ndou said the moderation in consumer spending in the second quarter underscored the economy’s inability to generate enough jobs.

“In addition, this slight moderation is a reminder to policymakers of the limited influence of smaller cuts in repo rate in raising consumer spending,” Ndou said.

“Therefore, the weakening of consumer confidence indicates the impending marginal contribution of consumption to overall economic growth in the near future.”

Investec chief economist Annabel Bishop warned that sentiment remains “deeply depressed,” particularly on the affordability of durable goods.

Bishop added that the very depressed sentiment over the suitability of the present time to buy durable goods reflected low consumer affordability on highly priced items, with consumers showing increasing debt stress.

“Eighty20 notes overdue balances grew twice as fast as total balances compared to the previous year, with overdue loan balances maintaining double-digit YoY growth for two consecutive quarters. Interest rate cuts have not provided a counterbalance,” she said.

“The quarter also saw the first growth in the number of loans in default since early 2023, suggesting that the credit expansion may be outpacing some consumers’ ability to service their debt.”

Efficient Group chief economist, Dawie Roodt, said that the single most important thing about economic growth was actually confidence.

“The reality is that we do not have confidence in South Africa. And it's not only consumer confidence, it is also investor confidence and the confidence in the country, broadly speaking, is at a low in South Africa. And that tells you that future economic growth is also going to be low,” Roodt said.

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