Latest news with #Matikinca-Ngwenya
The Citizen
a day ago
- Business
- The Citizen
Index reveals consumers are willing to spend money, but not too much
A dip in consumer confidence suggests growing concerns about the future, with worries about job security, pay raises, and bonuses at the forefront. 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. ALSO READ: How South African households spent R3 trillion in one year 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.' ALSO READ: How Covid changed our lives, mental health and shopping habits 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.' NOW READ: This is what proposed 2% VAT hike did to consumer confidence
IOL News
a day ago
- Business
- IOL News
Why are middle-income families feeling more confident? Insights from the FNB-BER survey
In the second quarter, the index rebounded somewhat, although confidence remains below the more positive readings recorded during the second half of 2024 Image: Karen Sandison/Independent Media First National Bank and the Bureau for Economic Research's latest Consumer Confidence Index shows that families with an income of between R5,000 and R20,000 are more confident than those on either side of them. In the second quarter, the index rebounded somewhat, although confidence remains below the more positive readings recorded during the second half of 2024, FNB said in a statement on Thursday. This, said FNB chief economist, Mamello Matikinca-Ngwenya, is the result of several of adverse shocks that knocked consumer sentiment during the first quarter of 2025, including the initial proposed VAT increase in the first budget, the fallout between the ANC and the DA about the National Budget, brief return to Stage 6 load-shedding as well as 'US President Donald Trump's alarming import tariff proposals'. Consumer Confidence Per Income Group_BER_FNB Image: Supplied/Nicola Mawson Improved sentiment is not uniform across all income groups, ranked from middle-, high, and then low-income consumers in terms of how much more confident they were than a year ago. For homes with an income of more than R20,000 a month (high-income), confidence may be up, but remains below the feelings of happiness in the second half of last year. For homes with an income of between R5,000 and R20,000 (middle) – confidence was the same as how they felt at the end of last year, while low-income earners still bear the brunt of a bad socio-economic environment. 'Middle-income confidence is currently significantly higher compared to high- and low-income confidence, said Matikinca-Ngwenya. Additional 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,' she said. Matikinca-Ngwenya noted that '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 benefitting middle-income households, said Matikinca-Ngwenya. Those living in households earning less than R5 000 a month were hard hit by a lack of access to the formal credit sector, higher food inflation, as well as higher unemployment. Statistics South Africa's latest unemployment figures showed that 90 000 people lost their jobs in March. Food inflation increased from 1.5% year-on-year in January to 4.4% in May and is projected to tick up further, which will disproportionately affect low-income households, said Matikinca-Ngwenya. 'The devastating floods that swept through the Eastern Cape, as well as the alarming increase in the unemployment rate during the first quarter, may also be weighing down the confidence levels of less affluent consumers,' she said. IOL
