Cape Town – Statistics from the FNB/ Bureau for Economic Research (BER) consumer confidence index released earlier to showed that South African consumers continued to be under pressure in the second quarter of this year after the index dropped to -9 from the -5 recorded in the previous quarter.
FNB senior analyst, Jason Muscant says that the data indicated that households concerns about weak outlook of the economy persisted. “Despite the recent deceleration in food inflation, food prices remain very high and will continue to dampen the real purchasing power of consumers, especially for low income households.”
“Per capita real disposable income is set to deteriorate further on the back of exceedingly poor economic growth, little to no job creation, and substantial increases in personal income taxes for middle and high-income earners,” says Muscant.
Macroeconomics statistics website Trading Economics says that Consumer Confidence in South Africa averaged 1.29 from 1982 until 2016, reaching an all time high of 23 in the first quarter of 2007 and a record low of -33 in the second quarter of 1985.
Read also: SA's trucking industry is in trouble
Usually a decline in inflation boosts households’ spending power in real terms, as salaries and wages typically increase by more than inflation on such occasions. However, this time around, the increase in salaries and wages was not only modest by historical standards, but the increase in personal taxation in the second quarter also almost fully offset what modest real increase remained.
The country’s business confidence is also currently in negative territory, after BER last month reported that South African business confidence fell to levels not seen since the 2009 recession after it tanked from 29 points in the second quarter from the 40 points recorded in the first quarter.
BUSINESS REPORT ONLINE