Consumer confidence in South Africa declines in Q3 2025

Consumer confidence in South Africa has taken a downward turn in the third quarter of 2025, with the Composite Consumer Confidence Index (CCI) reading plunging to -13. While this figure remains above the dismal -20 recorded in the first quarter, it illustrates a more pronounced decline compared to the relatively improved sentiments seen in the latter half of 2024. Showcasing growing unease across the consumer landscape, particularly among middle-income earners, the dip raises concerns regarding real household consumption expenditure growth in the upcoming quarters.

The latest CCI survey reveals that confidence among middle-income households, defined as those earning between R5,000 and R20,000 per month, has dropped alarmingly from -7 to -16 index points. This shift starkly contrasts with the more stable confidence levels displayed by high-income households, which remained unchanged at -11 index points. In a surprising twist, low-income households (earning less than R5,000 per month) experienced a rebound in confidence, climbing from -15 to -9 index points, further underscoring the complexity of the economic landscape.

The third-quarter decline in the CCI is attributed primarily to deteriorations in household finances and economic outlook sub-indices. The economic outlook sub-index slumped from -18 to -22 index points, reflecting growing pessimism about future economic performance, while the household finances sub-index fell from 9 to 3 index points. This signifies a marked decline in personal financial wellbeing, particularly among those in the middle-income bracket.

However, amidst the gloom, there emerged a modicum of relief for consumers eager to purchase durable goods. Benefitting from a 25-basis-point cut in the prime interest rate and an appreciation of the rand, the index examining the appropriateness of the timing to buy durable goods, such as vehicles and household appliances, moved slightly upward from -21 to -20—its only favourable position compared to the same quarter last year.

FNB Chief Economist Mamello Matikinca-Ngwenya directed attention to the resilience displayed by low-income households, highlighting how increases in social grants, confirmed to rise between 5.7% and 5.9% year-on-year in the May 2025 budget, could be easing their financial burdens. “The uptick in low-income confidence is somewhat surprising given the sharp increase in food inflation in recent months, which typically exerts a disproportionately negative influence on the purchasing power of less affluent consumers,” Matikinca-Ngwenya said.

Statistics South Africa has reported that food inflation surged from an annual rate of 1.5% in January to 5.2% by August, placing additional pressure on household budgets. Moreover, a modest job growth of only 19,000 jobs—or 0.1% quarter-on-quarter—has exacerbated economic concerns going into the next quarter.

As the retail landscape braces for potential impacts from waning consumer confidence, the behavioural dynamics of high-income households, who usually drive significant consumer spending, remain a vital consideration. Stabilised confidence in this sector is seen as a positive for retail as this income group possesses the most spending power. Yet, rising inflation, dwindling two-pot retirement payouts, and diminishing consumer outlook are anticipated to hinder real household expenditure growth towards the end of 2025.

The crux of the matter is that while confidence among affluent households remains stable, the combined factors of inflation pressures and reducing consumer enthusiasm are likely to culminate in a significant slowdown in consumer spending. Should job creation fail to rebound and further interest rate cuts remain absent, households—particularly in the middle and lower income brackets—may experience a harsh tightening of their financial capabilities in the months ahead.