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Consumer mood remains gloomy — and expected to darken

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South African consumers were not quite as gloomy in the second quarter as economists had expected — but nonetheless remained more pessimistic than during the 2008-09 recession.

Stellenbosch University’s Bureau of Economic Research (BER) consumer confidence index came in at minus 11, a little better than the forecast minus 12.4 points.

The First National Bank-sponsored poll found consumer confidence was minus nine points in the fourth quarter of 2015, an improvement from minus 14 points in the third quarter.

"Consumer confidence levels remain far more depressed than the lowest reading recorded during the 2008-09 global financial crisis and recession of minus 6, signalling that consumers are very concerned about the outlook for the domestic economy and their household finances," FNB chief economist Sizwe Nxedlana said in Tuesday’s statement.

The fieldwork for the survey was completed on June 10, before the explosion of violence and looting in Tshwane following the announcement of Thoko Didiza as the ANC’s mayoral candidate, and also well before Britain voted to leave the European Union, causing a selloff in global stocks, Nxedlana said.

These two factors increased uncertainty about SA’s economic prospects and had the potential to suppress consumer confidence even more during the second half of June 2016.

"A myriad of adverse economic forces had already been hammering the South African economy since 2015, including political uncertainty, social unrest, very low business confidence levels, a stagnation in public sector employment, a dramatic depreciation in the rand, soaring food prices and rising interest rates," Nxedlana said.

"Unfortunately, given that inflation is set to accelerate further on the back of the drought-induced rise in domestic grain prices and sustained weak rand exchange rate, the purchasing power of most households will likely wane further in coming months.

"With little support expected from policy makers, we expect the growth in real consumer spending to slump from a meagre 1.7% in 2015 to near zero in 2016," he said.

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