SA consumer confidence plummets

Published Jul 2, 2015

Share

Johannesburg - Consumer confidence plunged to a 14 and a half year low in the second quarter of this year as South African consumers’ rating of the country’s economic prospects fell to its worst levels since 1992 - even worse than during the 2008 recession, while consumers’ financial position and timing to buy durable goods also fell.

This was according to the FNB/Bureau for Economic Research Consumer Confidence Index which was released on Thursday. During the second quarter, consumers have had to contend with the outbreak of xenophobic violence, increased loadshedding, higher taxes and petrol prices and the even the prospect of even higher electricity tariffs, until the National Energy Regulator of South Africa (Nersa) this week declined Eskom’s request for a further 12.61% increase.

“Factors such as increased loadshedding, a further depreciation in the rand exchange rate and the tax hikes and slowdown in government spending announced in February’s national budget already weighed on consumers’ rating of the outlook for the domestic economy in the first quarter of 2015,” said Sizwe Nxedlana, chief economist at FNB.

Nxedlana said that since the end of March and the outbreak of xenophobic violence, a 19% increase in the price of petrol, higher debt servicing costs and rising unemployment had further dented consumer confidence.

The Bureau said that during the second quarter, the financial position and time to buy durable goods sub indices fell by 9 and 12 points respectively. The economic outlook sub index fell by 14 points to -24 while consumers’ rating of South Africa’s economic prospects fell to -25, their lowest level since the 1992/1993 economic downturn.

It also found that the change in labour laws at the beginning of the year that now made it nearly impossible to hire workers in temporary positions for more than three months may also have led to a drop in temporary employment and take-home pay.

According to Statistics South Africa, South Africa’s unemployment rate hit a decade high of 26.4% during the first quarter of the year.

ANA

Related Topics: