SA consumer confidence plunges, especially among the affluent

Consumer confidence levels have plunged to -25 in the second quarter of 2022 as the local and global economic outlook sours in the wake of spiking inflation and the fallout from the Russia-Ukraine conflict.

The latest FNB/BER consumer confidence index (CCI) reading, published yesterday, is the worst in more than three decades, barring the initial Covid hard lockdown period in the second quarter (Q2) of 2020.

“Having already slipped from -9 to -13 index points during the first quarter of 2022, the FNB/ BER CCI plunged to -25 in the second quarter of 2022,” FNB notes in a statement.

“Bar the CCI reading of -33 in the second quarter of 2020 – when the sudden outbreak of the Covid pandemic and subsequent implementation of level 5 lockdown pummelled sentiment – the current reading is the lowest in more than three decades.

“Whereas official data shows that the growth in real consumer spending remained robust [3.2% year-on-year] during the first quarter of 2022, the dramatic deterioration in consumer sentiment now signals a marked slowdown in consumer spending in coming months,” it warns.

“The remarkable collapse of the CCI during the second quarter of 2022 can be ascribed to a major deterioration in the economic outlook sub-index of the CCI [from -18 to -39] and a complete turnabout in the household financial prospects sub-index [from +8 to -5].”

“The index measuring the appropriateness of the present time to buy durable goods also edged down [from -28 to -32], indicating consumers consider the present as an inappropriate time to purchase durable goods.”

Meanwhile, a more detailed breakdown of the CCI for Q2 2022 shows that, while consumer confidence fell notably across all income groups, high-income confidence has soured more than low-income confidence.

“Having already slumped from -11 to -18 index points in the first quarter, the confidence level of high-income households [earning more than R20 000 per month] crashed to -30 in Q2.”

“This reading is only three index points north of the historic low of -33 recorded for this sub-index in the second quarter of 2020, with the vast majority of affluent households now anticipating a deterioration in their household finances and, in particular, in SA’s economic growth rate,” the report highlights.

“Although consumer sentiment is now very depressed across all three income groups, affluent consumers are considerably more downbeat compared to low-income households,” it adds.

“The prospects of further steep interest rate hikes and sinking share prices on the JSE would have compounded the inflationary pressures when it comes to middle and high-income households.”