South African consumer confidence jumped to a record high in the first quarter of 2007, with significantly more consumers expecting the economy and their household finances to improve, a survey showed on Tuesday.
The confidence index compiled by First National Bank (FNB) and the Bureau for Economic Research (BER) increased to +23 in the first quarter of this year from +18 in the final three months of 2006. The previous peak had been the +21 reached in the first quarter of 2006.
The rise in confidence followed a halt in the central bank’s campaign of interest rates increases in February after it had raised the repo rate four times in the second half of last year.
President Thabo Mbeki also promised tougher action on crime in a speech in February, while Finance Minister Trevor Manuel announced tax cuts and the country’s first ever budget surplus during the quarter.
”The president’s State of the Nation Address, the budget speech, the steady interest rate, the lower petrol price at the time of the survey and strong job creation generally made consumers more optimistic about the prospect for the economy and their own finances,” FNB chief economists Cees Bruggemans said.
Confidence increased in nearly all categories surveyed, although the percentage of people rating the present as a good time to buy durable goods remained the same as in the previous survey, he said in a statement.
The results were in line with the BER’s retail survey, which showed that, except for semi-durable goods and new vehicles, sales remained high in the first quarter.
Official data showed retail sales rose 9,4% year-on-year in January.
South Africa’s central bank raised its repo rate by two percentage points between June and December 2006 before leaving it steady in February. Analysts are divided on whether it will resuming lifting the repo on Thursday due to signs that inflationary pressures may be building again.
Fuel prices increased sharply in March and April and food prices are expected to have jumped on higher maize prices. – Reuters