The decrease in consumer confidence for the third quarter shows that consumers are battling financially and there will be no respite soon.
There will be no relief in sight for consumers this festive season, with an expert saying all signs point to a bleak festive season ahead for South Africans who battled their way through the year in the face of crippling living cost increases and stubbornly high interest rates.
Meanwhile economists predict a tough final quarter for South Africa’s workforce.
For consumers facing weak job creation, rising inflation, escalating food and electricity prices and no real respite in the cost of transport, the announcement by the department of petroleum and mineral resources of an increase in the price of petrol of 2 cents and 8 cents yesterday is a slap in the face of millions of working South Africans across the country, Neil Roets, CEO of Debt Rescue, says.
“People are in dire need of some real financial relief. The only good news is the announcement of a diesel price decrease of 10 cents per litre.”
Household consumption expenditure accounts for about two-thirds of South Africa’s economic activity and the warning from FNB chief economist Mamello Matikinca-Ngwenya that waning consumer confidence will likely translate into a more pronounced slowdown in real household expenditure growth towards the final quarter of the year, should raise alarm bells.
“In the absence of further interest rate cuts and a bounce-back in job creation, higher food inflation will erode the purchasing power of middle- and low-income consumers in particular,” she says.
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Drop in consumer expenditure shows serious financial trouble before festive season
Roets says when household consumption expenditure drops, it is a sure sign of a consumer base in serious trouble.
Against this backdrop, it is not surprising that consumer confidence in South Africa has taken a downward turn in the third quarter of 2025, with the Consumer Confidence Index for the third quarter plunging to -13, illustrating a more pronounced decline compared to the relatively improved sentiments in the last half of 2024.
The third-quarter decrease in consumer confidence is primarily attributed to deterioration in household finances and economic outlook sub-indices.
“This year’s Consumer Confidence Index for the third quarter paints a picture of a nation in serious financial distress with household budgets leaving little leeway for any festive cheer and even less relief from the tough year. The bells are tolling for South Africans from all walks of life and they are not ringing in a good way,” Roets warns.
He also points out a very distressing and significant finding from the latest Zaka Index that outlines how young people between the ages of 18 and 35 think about money.
The index shows that the persistent financial stress among young South Africans, with 82% earning less than R6 000 per month, is leading to an unhealthy reliance on short-term or risky loans.
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Youth already learning to skip meals due to no money
Most concerning is that leads to young people skipping meals, delaying payments and relying on credit to make ends meet. Nearly every respondent (80%) who participated said they either skipped meals or delayed important payments due to a lack of funds.
“This is deeply concerning, as approximately 50% of South Africa’s working-age population is between the ages of 15 and 34 and this generation is the future bedrock of the working economy.
“The cold, hard truth is that not only are they relying on loans to pay for unexpected expenses, but they are also making necessity purchases by swiping credit and store cards.
“This excessive debt will need to be repaid, perpetuating the cycle of debt at a time when their financial predicament is already dire.”
This situation is of course not limited to the youth, with the household debt-to-income ratio now at 70%, the highest since 2017.
Roets says this trend is driven by persistent increases in the cost of living, particularly electricity and fuel and a significant decrease in consumers’ purchasing power over the past nine years.
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Despite no relief for consumers, banks are growing
However, South Africa’s major banks continue to exhibit growth and resilience amidst complex conditions and considerable uncertainty, according to the PwC’s Major Banks Analysis for the first half of 2025.
”The upside is that they represent an island of stability for the working citizen in the currently rocky economic seas.
“South Africans are relying more and more on credit simply to survive, with payday loans on the increase. Without meaningful relief, the consumer debt crisis will only deepen in the months ahead, the analysis said.
