S.African consumer confidence plummets in Q2 as spending shrinks

First National Bank Alaska

29/06/2022 09:00

June 29 (Reuters) - South Africa's consumer confidence
plunged to minus 25 in the second quarter of 2022, the lowest in
more than three decades — barring 2020 when the COVID-19
pandemic hit — as consumers tightened their purse strings, a
survey showed on Wednesday.
    Factors spanning from the impact of COVID-19-related
restrictions to soaring commodity prices after Russia's invasion
of Ukraine, among others, have hurt sentiment and curbed
spending across the globe.
    The consumer confidence index (CCI), sponsored by First
National Bank (FNB) and compiled by the Bureau for Economic
Research, crashed from minus 13 in the prior quarter. The second
quarter of 2020 had a reading of minus 33.
    Although consumer sentiment was expected to weaken further
due to worsening inflation and interest-rate outlook, the extent
of the drop is alarming, the survey added.
    The index measuring the appropriateness of the present time
to buy durable goods like cars, furniture, and electronic goods
etc. also edged down, showing that consumers did not consider it
a good time to make big-ticket purchases.
    The survey further revealed that while consumer confidence
fell notably across all income groups, high-income confidence
has soured more than low-income confidence since the end of
2021.
    Confidence levels of high-income households slumped to minus
30 during the second quarter, merely three points away from the
historic low of minus 33 recorded for this sub-index in the
second quarter of 2020. 
    Even though consumers are likely to tighten their purse
strings, the surprisingly large fall could signify somewhat of
an over-reaction and may not translate into an equally large
contraction in consumer spending, the survey said.

 (Reporting by Amna Karimi in Bengaluru; editing by Uttaresh.V)
 ((Amna.Karimi@thomsonreuters.com; +91 8083261226;))