In a significant boost for the South African economy, the FNB/BER Consumer Confidence Index (CCI) surged from -10 to -5 index points during the third quarter of 2024. This marks the second consecutive 5-point increase, resulting in the highest CCI reading since 2019. Although the current index remains below the long-term average of zero, it is the highest level of consumer confidence recorded since the first half of 2019, before the onset of the COVID-19 pandemic.
The notable 10-point rise in the CCI over the past six months, and a 20-point increase since mid-2023, reflects a marked improvement in consumers’ willingness to spend. This positive trend bodes well for consumer spending in the remainder of the year. The recent increase in consumer confidence is largely attributed to significant gains in the household financial outlook sub-index and a rise in perceptions regarding the appropriateness of purchasing durable goods, such as vehicles, furniture, and electronics.
The household finances sub-index climbed from 8 to 14 index points in the third quarter, reaching its highest level since Q4 2021. Similarly, the sub-index measuring the timing for buying durable goods improved to a two-year high of -23. The economic outlook sub-index also showed continued improvement, rising by two points to -7.
This third consecutive increase in consumer sentiment signals a robust recovery in consumer confidence, moving from an average of -20 in 2023 to a five-year high of -5. Contributing factors include a slowdown in inflation—from 6% in 2023 to 4.6% by July 2024—implementation of the two-pot retirement system, and expectations of an interest rate cut by the end of September. These developments are expected to enhance real disposable income and boost consumer spending, particularly on durable goods.
