Consumer confidence plunges to lowest for festive season in 20 years. No wonder?

Motheo Khoaripe interviews Ndumiso Kubheka, chief economist at investment holdings company KH Research Equity Partners.

consumer confidence plunges to lowest for festive season in 20 years. no wonder?

Generic image of shopping centre interior @ petrunina/123rf.com

Many South Africans are feeling gloomy about having enough money to see them through the festive season, traditionally a time to spend more than usual.

And retailers are sure to feel the pressure of the economic pinch as shoppers hold back out of necessity.

We all know the reasons consumers are under increasing pressure – it’s the well-known litany of factors like rising food prices, ongoing loadshedding, high inflation and interest rates.

The mood is reflected in the latest consumer confidence rating numbers.

The FNB/BER Consumer Confidence Index slipped lower in the fourth quarter of 2023, to minus 17 points.

This is the lowest festive-season consumer confidence reading in more than two decades, the report says.

It is even below the reading of -12 recorded during the COVID-19-afflicted fourth quarter of 2020. This suggests that consumers will keep tight control over their purse strings during the holiday shopping season, which should worry retailers of expensive luxury goods in particular.

FNB/BER Consumer Confidence Index

Motheo Khoaripe gets comment from Ndumiso Kubheka, chief economist at investment holdings company KH Research Equity Partners.

The data certainly indicates that consumers will be holding on to their wallets this festive season, Kubheka concurs.

I think this data set as a leading indicator, is indicative of the general consumer environment… but also the permutation of the producer environment and what the outlook is. Of course this is likely to be reflected in the retail sales numbers that we will see, and of the stickiness of inflation that we’ve seen over the past year.

Ndumiso Kubheka, Chief Economist – KH Research Equity Partners

It will also be reflected in the national Budget to be presented at the start of the new year, he adds.

Do the consumer confidence numbers play into some analysts’ prediction that South Africa is heading for a technical recession?

If this data set is anything to go by I think we certainly are at risk for a technical recession, and specifically as well when we’re looking at the constrained fiscal environment that South Africa finds itself in right now, which is likely to be reflected in taxation revenue to be reported into the new year.

Ndumiso Kubheka, Chief Economist – KH Research Equity Partners

Looking at the monetary policy environment, we’ve seen higher interest rates for an elevated period of time. We’re also likely to see higher interest rates for longer, which of course would then suggest that from a retail perspective we’re unlikely to see greater expenditure when it comes to more durable goods. Of course this has a significant impact on the related industries…

Ndumiso Kubheka, Group CEO – KH Research Equity Partners

Scroll up to listen to Kubheka’s analysis

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