The CCI released on Tuesday, 8 April 2008, by FNB and Stellenbosch University's Bureau for Economic Research, decreased from a still very high reading of +22 index points – in the fourth quarter of 2007 - to +12 during 2008's first quarter.
The 2008 first quarter consumer confidence survey was based on 2,500 urban South Africa households to figure out how urban consumers see the economy and their own families.
FNB Chief Economist Cees Bruggemans said: “The outcome this month at +12 still suggests a majority of consumers to be net positive, but this has now clearly been reduced, breaking the four year pattern of unremittingly high levels of confidence.”
He said the obvious explanation for the decrease was the Eskom electricity emergency, but also the sharply higher CPIX inflation which was eroding real purchasing power, led by oil and food.
This was worsened still by a weaker rand and an electricity price shock still to be absorbed.
On the positive side for different groups of consumers, the chief economist said the South African Reserve Bank did not increase interest rates in January.
He added that the overall consumer confidence index fell heavily because consumers took a very negative attitude towards the economy and whether now was a good time to buy durable goods or not.
The confidence of white consumers, on the other hand, eased a modest seven index points from +6 to -1 and that of black people eroded most, by 12 index points from +30 to +18 during the first quarter of 2008.
Bruggemans said he expected consumer confidence to drop further.
“Given the enormous complaints in recent months about Eskom's electricity interruptions and inflation racing ahead, as well as widespread political concerns, not least Zimbabwe, one is ready for a historic confidence plunging.”
At provincial level, Gauteng remained positive with a confidence level of +21, said the economist, adding that the economic heart of the country was still beating strongly despite all disruptions and anxiety.
“Overall, there is no doubt about the abrupt downshifting in consumer confidence across every conceivable groupings of household.”
Article published courtesy of BuaNews
