Johannesburg – Consumer confidence slumped in the fourth quarter of last
year after election euphoria faded.
This comes after the FNB/BER Consumer Confidence
Index rebounded from -11 index points in the
second quarter of last year to -3 in the third.
It has since sagged back to -10 in
the fourth quarter.
FNB notes in a statement issued on
Thursday that, although the CCI only dipped to -10 index points or lower on
three occasions during the twenty-one years between 1994 and 2014, this is the
fourth time in less than two years that the CCI has dropped to -10 or lower.
“Consumer sentiment has been consistently below the
long-term average reading of the CCI of + 4 since the second half of 2014.”
It says the deterioration in consumer
sentiment during came on the back of a reversal in the gains that were made
during the third quarter for the two forward-looking sub-indices of the CCI, namely the expected
performance of the SA economy in
12 months' time and the financial prospects of households in 12 months' time.
Read also: Consumer confidence recovers
Jason Muscat, senior economic analyst
at FNB, said "positive economic developments such as an appreciation in
the rand exchange rate, a welcome (R1.17) drop in the petrol price and a modest
recovery in job creation supported the purchasing power and confidence levels
of consumers during the third quarter of 2016.
“The peaceful, free and fair
completion of the municipal elections in early August, as well as the final
outcome, may also have raised the confidence levels - or expectations for the
future - of some consumers. However, the election boost to confidence likely
faded during the fourth quarter, and the economic realities of weak household
income growth, poor credit extension and soaring food prices once again exerted
downward pressure during the festive season."
Consumer pressure
In addition, the petrol price
increased by 88 cents per litre (7.5%) between September and November, although
there was slight relief of 20 cents per litre announced on 7 December. The JSE
All Share index, in turn, slumped from above 53 000 index points in the first
half of September to below 50 000 in the first week of December, which may have
weighed on the confidence levels of affluent consumers.
There were also a number of political
developments that had the potential to suppress the confidence of some
consumers during the fourth quarter, including the NPA's decision to charge
Finance Minister Pravin Gordhan with fraud in October 2016, the high court
application by President Jacob Zuma to stop the publication of the public
protector’s state capture report and the election of Donald Trump as the next
president of the US.
FNB notes the fourth quarter decline
is likely a correction of third quarter optimism.
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