African Markets

SA consumer mood hushed by fuel price hikes, power cuts

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Consumer confidence in South Africa remained basically unchanged in the fourth quarter, owing to record-high gasoline costs, the reintroduction of rolling blackouts, protests, and supply-chain disruptions.

FirstRand Ltd.’s First National Bank stated in an emailed statement Tuesday that a quarterly sentiment index rose to -9 in the three months through December from – 10 the previous quarter.

While the current level, which was last observed in the first quarter, is similar to the reading prior to the coronavirus epidemic, the index remains below the average consumer confidence reading of 2 throughout 1994, indicating depressed sentiment.

According to the Johannesburg-based lender, much of the survey’s fieldwork was done before South African scientists reported that they’d discovered the Omicron version of the coronavirus.

Consumer attitude may be impacted in the coming months by the reinstatement of travel prohibitions and questions about the efficacy of existing Covid-19 vaccines against the new strain, it said.

“Whereas international travel restrictions typically affect the sentiment of affluent consumers, low- and middle-income households will arguably suffer the most in terms of job creation and income prospects if the expected bumper tourist season does not materialise and lockdown restrictions once again hammer the hospitality sector during the holidays,” said Siphamandla Mkhwanazi, a senior economist at FNB.

Data reveals that confidence is significantly negative across income groups, with basically equal levels heading into South Africa’s summer holiday season.

The confidence of high-income households earning more than R20 000 per month remained steady, while the confidence of middle-income and least-affluent consumers earning less than R2 500 per month improved little.

Small increases in the economic outlook and household financial position sub-indices drove the tiny gain in total consumer confidence, according to FNB. Consumers are still gloomy about whether now is the best time to buy big-ticket things like cars, furniture, and household appliances, according to the lender.

Story by : Norvisi Mawunyegah