After a year of gloom and doom due to various factors affecting the global economy, consumer confidence has increased.
The festive season has lifted consumer confidence, showing that consumers are more willing to spend, which is good news for the trade sector.
The FNB/BER consumer confidence index released on Tuesday improved to -9 index points in the fourth quarter of 2025 from -13 in the third quarter. Although the fourth-quarter reading is the strongest of 2025, it remains weaker than the fourth-quarter level of 2024 of -6 and well below the long-run average of -1.
Jee-A van der Linde, senior economist at Oxford Economics Africa, says the index shows that South African consumers are more cheerful in the fourth quarter and believe it is an appropriate time to buy durable goods, particularly among middle-income households.
“This bodes well for the trade sector, which was already one of the main drivers of gross domestic product (GDP) growth in the third quarter.”
All three subindices for consumer confidence improved on a quarterly basis. The subindex measuring the appropriateness of the present time to buy durable goods recorded the largest increase from -20 to -14, reaching its highest level since mid-2019.
ALSO READ: Slight increase in consumer confidence, but still lags behind 2024’s numbers
Consumer confidence highest for middle-income households
Van der Linde says declining interest rates and a stronger exchange rate support the affordability of durable goods. Meanwhile, the economic outlook subindex rebounded to -19, while the household finances subindex increased to 5 index points.
Confidence among middle-income households rebounded the most from -16 to -8, while confidence among low-income households changed very little, improving only slightly to -8 from -9 in the third quarter. However, affluent consumers turned slightly more pessimistic in the fourth quarter, as confidence slipped from -11 to -12.
Van der Linde says the uptick in consumer sentiment points to a modest improvement in the willingness to spend, particularly among middle-income households, which bodes well for the trade sector in the fourth quarter.
“A positive outlook for the rand and declining interest rates, supported by a favourable inflation trajectory, suggests that consumer confidence should strengthen further in 2026.
“Household consumption has so far performed better than expected in 2025 and is forecast to grow by 3.1% this year compared to 1.0% in 2024, supported by stronger real earnings growth. Although household consumption should remain a key driver of near-term GDP growth, we expect a gradual moderation in consumption growth over the course of 2026.
“Following the latest GDP figures, we have slightly increased our economic growth forecasts for 2025 to 1.3% and to 1.4% for 2026.
ALSO READ: SA reaches highest financial confidence level yet, but where is the action?
Consumer confidence will see tills jingle this festive season
Mamello Matikinca-Ngwenya, chief economist at FNB, says the increase in consumer confidence suggests retail tills will jingle loudly this festive season.
“Apart from a further interest rate cut and an appreciation in the rand exchange rate, a number of other positive developments likely buoyed consumer sentiment towards the end of the year. These include a 47 cent per litre decline in the petrol price between August and November, food inflation easing from 5.5% in July to 3.9% by October and a 248 000 jump in employment during the third quarter of 2025.
“In addition, South Africa received a sovereign credit rating upgrade by S&P for the first time in 20 years and was also removed from the Financial Action Task Force grey list, after addressing shortcomings related to the country’s anti–money laundering and counter–terrorism financing frameworks.”
Matikinca-Ngwenya says the uptick in consumer sentiment shows a slight improvement in the willingness to spend, particularly among middle-income households, compared to the third quarter of 2025.
ALSO READ: Black Friday: What did shoppers buy this year?
Improved job creation and declining repo rate bolster consumer confidence
“Conversely, improved job creation and declining interest rates should bolster consumers’ ability to spend. These developments suggest that retail tills will jingle a merry tune during the 2025 festive season, with sales volumes projected to exceed the already jolly numbers recorded during the 2024 holiday period.”
However, Matikinca-Ngwenya says, the annual growth rate in real consumer spending is projected to slow compared to the robust growth recorded during the first three quarters of the year, as the y-o-y growth rate for the fourth quarter will be the first quarter that compares with a quarter in 2024 that already fully included two-pot retirement system withdrawal spending.
“Withdrawals from the two-pot retirement system likely boosted real consumer spending by at least one percentage point over the past year, but this should now be fully reflected in the base. Nevertheless, the results from the latest FNB/BER consumer confidence survey suggest that retailers may have more to cheer about during the Christmas shopping period than previously anticipated.”
