Consumers keep wallets closed

CONSUMER confidence plummeted in the first quarter of this year‚ suggesting that consumers were less eager to spend despite lower inflation and slower rises in food prices.

Lower consumer confidence does not bode well for economic growth and is yet another indication of a slump in the first quarter compared with the fourth quarter of last year.

The First National Bank/Bureau for Economic Research’s (FNB/BER) consumer confidence index slumped to -4 index points from zero in the fourth quarter of 2014.

Consumers felt pessimistic about the economic outlook mainly because of the disruptive effects of load-shedding‚ as well as the petrol price and tax hikes putting a dent in their finances.

High unemployment and rising debt levels would also put a damper on household spending‚ which was likely to experience single-digit growth this year‚ BNP Paribas Cadiz economist Jeff Schultz said.

Real income growth was forecast to moderate towards next year as the benefits from lower oil prices faded‚ FNB chief economist Sizwe Nxedlana said.

A 96c a litre petrol price hike‚ further rand depreciation against the dollar and rising social and political turmoil were also identified as contributing factors to the decline in confidence.

The latest reading of -4 is well below the long-term average of 5‚ suggesting that consumer confidence is still far from recovering to the levels supportive of higher spending.

The index is compiled after nearly 2 500 adults are surveyed on how they feel about their finances‚ whether they consider the current period as conducive to buying durable goods or not‚ and their sentiments about the economic outlook.

Credit bureau TransUnion’s consumer credit index showed that consumer credit health improved at its fastest pace since 2011 in the first quarter of this year.

Inflation accelerated to 4% yearonin March from 3.9% in February in what economists believe to have been the start of a moderate upward trend.

The credit bureau’s index also showed that loan repayment behaviour continued to improve in the first quarter. — BDLive