JOHANNESBURG – South Africa’s consumer confidence is set to improve due to the sharp declines in fuel prices in December and again in January after the FNB/BER Consumer Confidence Index (CCI) held steady at +7 index points in the fourth quarter of 2018.

The FNB/BER raced to 26 points in the first quarter of 2018 from -8 points in the previous quarter as Ramaphoria saw consumers spending more. The increase was the largest single quarter improvement since BER started publishing a composite index in 1982.

FNB chief economist Mamello Matikinca-Ngwenya said consumers were fairly optimistic that the outlook for the South African economy and their own household finances would improve during the next 12 months.

“Looking ahead, the sharp drop in fuel prices (and possible further decline in February) should bring long-awaited budgetary relief to many households and simultaneously reduce the pressure on the SA Reserve Bank (Sarb) to implement further interest rate hikes to counter rising inflation,” she said.

“However, in order for a more enduring and significant improvement in consumer spending to take hold, household income and credit growth would also need to accelerate.” Petrol and diesel prices fell 184 cents and 145c a litre, respectively, in December. 

This week Statistics South Africa said inflation had dipped to a seven-month low of 4.5 percent in December, settling in the midpoint of the Sarb’s target range of 3 to 6 percent. 

Inflation decelerated after a stronger rand and lower international crude-oil prices saw fuel prices falling in December and January.