Consumer confidence at its lowest since last quarter of 2017
Data released yesterday by lender FNB and the University of Stellenbosch’s Bureau for Economic Research (BER) showed consumer sentiment dropped from 7index points in the fourth quarter to 2index points in the first quarter.
The fall in consumer confidence at the beginning of the year marks a complete turnaround from a record high of 26points registered at the height of Ramaphoria during the first quarter last year.
FNB/BER said the first-quarter reading suggested that most consumers were neither optimistic nor pessimistic about the outlook for the economy and their own household finances this year.
A closer look at the data showed that confidence among consumers who earned more than R14000 a month plummeted from 13 points to 3 points in the period under review, while sentiment among those who earned between R3000 and R14000 a month decreased by 9 index points.
FNB chief economist Mamello Matikinca-Ngwenya said the implementation of stage four load shedding by Eskom in February and March had a detrimental impact on consumer sentiment.
“Other factors that may have contributed to the deterioration in consumer confidence prolonged labour strikes, the depreciation in the rand, sharp fuel price hikes and further increases in personal income taxes announced in the February national Budget,” Matikinca-Ngwenya said.
“Given the disproportionally large spending power of high-income households, the significant deterioration in consumer confidence among high-income households does not bode well for the already ailing retail sector.”
Figures released by StatsSA last week showed that retail sales weakened from 1.2percent in January to 1.1percent in February as consumers battled with the rising costs.
The depressed consumer market was also reflected in new vehicle sales, which dropped 3.1percent year-on-year to 47718 units last month.
Investec economist Kamilla Kaplan said the drop reflected the effects of extensive load shedding in February and March, as well as the fuel price increases and announcement of the substantial electricity tariff increase for this year.
“Persistently weak confidence constrains the willingness to spend, whilst consumers’ ability to spend has been restricted by subdued disposable income growth, higher taxes, elevated unemployment and relatively contained rates of credit extended to households,” Kaplan said.