The Q1 CCI reading indicates that South African consumer confidence has simply been shattered. The intensity of the power cuts, which are slashing economic growth to the bone, have combined with accelerating inflation, rising interest rates and sky-high jobless levels to create a stagflationary quagmire that the South African consumer is sinking into.

The bottom line is a cost-of-living crisis that shows every sign of worsening, meaning that South Africans in general are getting poorer and hungrier – and presumably angrier. 

One of the many striking things about the CCI’s steep fall this quarter is that it came off an already low reading recorded in Q4 of 2022, when the economy contracted by 1.3%. So, this is the latest signal that the economy may have tipped into recession, and growth prospects for this year have all but vanished. 

The International Monetary Fund took a chainsaw this week to its South African gross domestic product outlook for 2023, cutting its growth forecast to 0.1%, from 1.2% previously.  

It’s also revealing to compare this reading to similar or lower levels in the past.

“The latest reading is broadly in line with the extraordinarily weak consumer confidence level recorded during the third quarter of 2020 (also -23, during a time of Level 3 Covid restrictions, alcohol bans, school closures and curfews), as well as the second quarter of 2022 (-25, when deadly floods devastated KZN and the economic ramifications of the Ukrainian war started to manifest),” FNB said.

“The reading of -23 is the third-lowest CCI reading on record since 1994 and indicative of extreme concern among consumers about South Africa’s economic prospects and their household finances.”

It’s also of more than passing interest to note how the different subindices fared.

“Affluent consumers are especially concerned about the outlook for the economy, with this sub-index nosediving from -18 to a new historic low of -51 in the first quarter,” FNB said. 

That doesn’t bode well for Woolworths or the posh shops at Hyde Park Corner – or the economy more widely, as such consumers have the greatest spending power. And the collapse in consumer confidence is starker among high-income households than low-income households, who are bearing the brunt of food inflation which raced to 14-year highs in February.

Read more in Daily Maverick: SA’s CPI accelerates to annual 7% in February, food inflation hits 14-year high

“A more detailed breakdown of the CCI shows that the confidence levels of high-income households (earning more than R20,000 per month) deteriorated the most during the first quarter, crashing from -10 to -31 index points. Bar the reading of -33 recorded during the initial panicked Level 5 lockdown period in 2020 Q2, this is the lowest reading for high-income confidence since the commencement of the series in 1995,” FNB said. 

One of the things at play here, FNB notes, is that a growing number of high-income households are now directing their expenditure to solar panels and backup power systems, leaving them with less capital for discretionary spending. 

And while they have not fallen as much, the confidence levels among middle- and lower-income households did decline sharply to pretty low levels. 

“The confidence levels of middle-income households (earning between R5,000 and R20,000 per month) dropped from -6 to -21, while low-income confidence (earning less than R5,000 per month) slumped from -6 to -17 index points.”

With extremely low or no GDP growth seen this year, inflation racing higher to 7.0% in February, and an unemployment rate that is effectively well over 40% by its broadest measure, South Africa’s economy is caught in the vice of stagflation. 

And that is hardly going to inspire business or consumer confidence. DM/BM