Consumer confidence in South Africa recovered in the second quarter after a general election and the stabilisation of the power grid, but consumer spending was likely to remain constrained for now, a survey showed on Wednesday.
The consumer confidence index, sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, rose to 5 in the second quarter from 2 in the first quarter of 2019.
But household budgets were expected to remain constrained by higher personal income taxes, rising fuel and electricity prices and growing unemployment, FNB Chief Economist Mamello Matikinca-Ngwenya said.
“Consumers have been taking on more credit as financial pressures mount, but it is unlikely that the modest uptick in credit extension will be sufficient to underpin household consumption amidst dwindling real disposable income growth,” Matikinca-Ngwenya added.
The election boost to confidence, coupled with greater stability in the power grid, probably offset substantial increases in fuel prices, the survey indicated.
South African lawmakers elected Cyril Ramaphosa president last week, and he promised to create jobs and work for the interests of all citizens.
The country has been plagued by frequent power cuts and a 19% increase in petrol prices from the end of February to the beginning of May.
Consumer confidence dipped in the first quarter, suggesting that most consumers are neither optimistic nor pessimistic about the outlook for the country’s economy, the survey showed last month.