The FNB/Bureau for Economic Research (BER) Consumer Confidence Index (CCI) Q1 2026 released on Tuesday indicated that the index improved slightly from -9 index points in the fourth quarter of 2025 to reach -7 in the first quarter of 2026.
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South African consumer confidence showed a modest improvement in the first quarter of 2026, but economists warn that escalating global tensions could quickly reverse these gains.
The FNB/BER Consumer Confidence Index (CCI) for the first quarter released on Tuesday rose slightly to -7 index points in the first quarter of 2026, up from -9 in the previous quarter. While still in negative territory, the latest reading marks the highest level since the fourth quarter of 2024.
The improvement was largely driven by a rebound in sentiment among high-income households. Confidence in this group surged from -12 to -4, supported by a combination of factors including withdrawals under the Two-Pot retirement system, lower interest rates, strong stock market performance and a firmer rand.
According to the index, most of the survey fieldwork was completed before the 2026 Budget Speech delivered by Finance Minister Enoch Godongwana, which was generally well received and is expected to further support sentiment.
However, the survey was also conducted before a major geopolitical shock — the escalation of conflict involving Iran following US military action — which has since rattled global markets. The resulting surge in oil prices, weaker stock markets and travel disruptions pose a clear downside risk to consumer confidence in the months ahead.
The CCI’s underlying components showed mixed trends. The economic outlook sub-index improved from -19 to -14, while the household finances sub-index climbed from 5 to 12, reflecting growing optimism about personal financial conditions.
In contrast, the index measuring the suitability of the current time to purchase durable goods — such as vehicles, furniture and appliances — declined sharply from -14 to -21. This suggests that despite improved sentiment, consumers remain cautious about making large purchases.
Income groups experienced diverging trends. While high-income households recorded strong gains across all sub-indices, middle-income earners saw only a marginal improvement, with confidence inching up from -8 to -7.
Low-income households, however, experienced a notable decline in confidence, falling from -8 to -12. Economists attribute this to weak job creation and tighter social grant compliance measures, which have placed additional strain on vulnerable households.
Mamello Matikinca-Ngwenya, chief economist at FNB, said subdued employment growth at the end of 2025 likely contributed to declining confidence among lower-income groups. She added that stronger job creation would be necessary to offset the combined impact of slower growth in social grants and rising fuel costs.
Matikinca-Ngwenya said that prior to the US’s strikes on Iran, a whole range of positive developments bolstered the confidence levels of high-income consumers, including lower fuel prices, a stronger rand exchange rate, declining interest rates, soaring stock prices on the JSE and a gradual improvement in South Africa’s economic prospects.
“Unfortunately, the ripple effects from the Iranian war may well see a U-turn in high- and middle-income confidence during the second quarter. Apart from the 10% fall in the JSE, the weaker rand exchange rate, travel disruptions and projected jump in fuel prices, the likelihood of further interest rate cuts during the second quarter has now all but evaporated,” she said.
Professor Waldo Krugell, an economist at North-West University, said though this reading was good news, he was not sure it will matter for household spending or economic growth going forward.
“The CCI reflects the upswing in confidence and positivity about the economy coming from the end of last year and now visible in first quarter numbers. But this would look set to be dampened by the fuel price shock fallout from the war with Iran," Krugell said.
"When fuel prices increase, households come under pressure directly from their own fuel spend and then the goods and services that they consume become more expensive as those fuel price increases work through the value chain of everything that is transported.”
Investec chief economist Annabel Bishop concurred that the effects of higher oil prices from the war in the Middle East will have a negative impact on consumer sentiment, along from an acceleration in inflation from its current 3.0%, and market’s interest rate expectations have switched to hikes.
"Higher fuel prices negatively impact travel, industry and GDP growth, with household consumption expenditure making up two thirds of GDP. The quicker the war ends the more limited the impact would be on consumer confidence," Bishop said.
BUSINESS REPORT