Index reveals consumers are willing to spend money, but not too much

The Consumer Confidence Index (CCI) by FNB indicates a recovery in individuals’ willingness to spend money, but confidence remains below the average CCI reading of -1 since 1994.

FNB Chief Economist Mamello Matikinca-Ngwenya notes that the second quarter saw a partial recovery in consumer confidence, rising to -10 from -20 in the first quarter.

The current confidence level indicates that consumers remain relatively pessimistic about the economy’s outlook and their household finances over the next 12 months.

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Consumers in the first quarter

Matikinca-Ngwenya notes that consumer confidence was low in the first quarter due to several political events.

“A number of adverse shocks knocked consumer sentiment during the first quarter of 2025, including the finance minister’s (aborted) proposal to hike value-added tax (VAT) by two percentage points (%pts); the fallout between the ANC and the DA about the budget; a brief return to stage 6 load shedding; souring diplomatic relations between South Africa (SA) and the United States (US); and US president Trump’s alarming import tariff proposals.”

The index shows that consumers remain pessimistic about SA’s economic prospects compared to their expectations at the end of last year.

Factors that help consumers

Matikinca-Ngwenya said the two-pot pension fund withdrawals at the start of the new financial year in March and another 25-basis-point cut in the prime interest rate at the end of May are supporting highly indebted middle-income households in particular.

“Low-income earners are less likely to have pension funds, while the R30 000 annual cap on two-pot withdrawals implies that these withdrawals will deliver a relatively smaller boost to the disposable income of high-income households compared to that of middle-income households.

“Lower fuel prices and the increased availability of more affordable new vehicles are also benefiting middle-income households.”

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About the Index

The index is to provide regular assessments of consumer attitudes and expectations and is used to evaluate economic trends and prospects.

The surveys are designed to explore why changes in consumer expectations occur and how these changes influence consumer spending and saving decisions.

A low level of confidence indicates that consumers are concerned about the future. They may be worried about job security, pay raises and bonuses.

“With such a mindset, consumers tend to cut spending on necessities to free up income for debt repayment. If confidence is high, consumers tend to incur debt (or reduce savings) and increase spending on discretionary items, such as furniture, household equipment, motor vehicles, clothing and footwear.”

Rise in confidence

A rise in consumer confidence reflects an increased willingness of consumers to spend. However, this willingness only translates into actual sales if consumers’ ability to spend improves.

Their ability to spend depends on their inflation-adjusted after-tax income and the availability of credit. A rise in consumer confidence could therefore result in an increase in household consumption spending in general, as well as in retail and motor vehicle sales in particular.

“The opposite applies when the level of consumer confidence declines.”

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