Big turnaround for middle class South Africans, says FNB
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Mamello Matikinca-Ngwenya, FNB Chief Economist talks about South African consumers are gaining confidence in the economy, according to the latest FNB/BER Consumer Confidence Index (CCI), with middle-class and upper-income South Africans reigniting a spark in consumer spending.
The overall index, compiled by FNB with the Bureau for Economic Research (BER) recovered from -20 to -8 points during the fourth quarter of 2022.
This, after the index plunged to -25 index points during the second quarter of this year, said FNB.
“Even though a reading of -8 still signifies depressed consumer sentiment, the scope of the rebound relative to the third quarter comes as a surprise given the sustained high inflation, frequent load shedding, successive significant interest rate hikes and a worsening global economic backdrop,” FNB said.
A rebound in consumer sentiment shows an improvement in willingness to spend. Despite the will to spend more, consumers’ ability to do also needs to improve to translate into a significant increase in household consumption, the bank said.
FNB’s chief economist Mamello Matikinca-Ngwenya said that while sharper interest rate hikes are still on the horizon, consumer sentiment is significantly improving.
This is positive news for the economy and suggests that household consumption expenditure is holding up – or even expanding slightly – despite difficult economic conditions, said Matikinca-Ngwenya.
The most recent movements by the CCI bring consumer sentiment more or less in line with the level attained during the same period last year (-9), as well as the year before (-7).
The graph below, provided by FNB, indicates the CCIs movement since 1994.
The overall index, compiled by FNB with the Bureau for Economic Research (BER) recovered from -20 to -8 points during the fourth quarter of 2022.
This, after the index plunged to -25 index points during the second quarter of this year, said FNB.
“Even though a reading of -8 still signifies depressed consumer sentiment, the scope of the rebound relative to the third quarter comes as a surprise given the sustained high inflation, frequent load shedding, successive significant interest rate hikes and a worsening global economic backdrop,” FNB said.
A rebound in consumer sentiment shows an improvement in willingness to spend. Despite the will to spend more, consumers’ ability to do also needs to improve to translate into a significant increase in household consumption, the bank said.
FNB’s chief economist Mamello Matikinca-Ngwenya said that while sharper interest rate hikes are still on the horizon, consumer sentiment is significantly improving.
This is positive news for the economy and suggests that household consumption expenditure is holding up – or even expanding slightly – despite difficult economic conditions, said Matikinca-Ngwenya.
The most recent movements by the CCI bring consumer sentiment more or less in line with the level attained during the same period last year (-9), as well as the year before (-7).
The graph below, provided by FNB, indicates the CCIs movement since 1994.
