A Ramaphosa government likely to lift consumer confidence

Low-income households experienced financial strain towards the end of last year as a result of food inflation and rises in the price of petrol in 2016 and 2017, as well as high unemployment rates, says the latest FNB and Bureau of Economic Research (BER) Consumer Confidence Index.

The rand is currently trading at a high of R11.80 to the dollar up from R16.80 in 2017.

The survey shows that consumer confidence slipped to an all-time low in the last quarter of 2017 compared with the high in the third quarter.

But the election of Cyril Ramaphosa as the ANC’s president could see consumer confidence improve in 2018, said Investec chief economist Annabel Bishop.

“The rand has recently strengthened on Ramaphosa’s appointment to president of the ANC, positive comments on ending corruption, repairing SOE [state-owned enterprise] governance and the health of public finances, maintaining key institutional strengths and promoting economic growth, as well as USD weakness,” says Bishop.


The index also shows that consumers’ view on the appropriateness of the time to buy durable goods fell. Low consumer confidence levels have also affected consumer outlook on household finances, which dropped. Bishop predicts it is likely to improve this year when consumer levels improve.

“Petrol price cuts feed through immediately to inflation, with CPI [consumer price index] inflation set to drop below the midpoint of the inflation target of 4.5% in February,” said Bishop, “as it would influence the SARB [South African Reserve Bank] to take a lower CPI outcomes as the period falls within the inflation target.”

Bishop added that the rand could move to R11 to the dollar should President Jacob Zuma resign to make way for Ramaphosa to lead the country “without any conditions that hamper his ability to follow the free market reforms necessary to avoid further credit rating downgrades, eradicate corruption and deliver rapid economic growth”.

The strengthening of the rand could also see consumers make savings from a petrol price cut, increasing their purchasing power and driving durable goods sales.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Thulebona Mhlanga
Guest Author

Related stories

Spicy atchar turns a hot profit

Atchar can be enjoyed with curry, vetkoek, which is also called magwinya, or the uniquely South African bunny chow called kota

Tobacco ‘epidemic’ in Africa fuelled by fewer filters

Cigarette consumption in Africa rose by 40% between 1990 and 2012

Banyana ace in the land down under

The footballer is one of two local players to be snapped up by a professional league in Australia

Low mobile data prices forecast

A new company has launched a service that seriously challenges those of the major mobile operators

Slice of life: You never know who is watching

'There are many football players in South Africa who have the talent to represent South Africa at a national level, but they chose me'

SARS working on restoring credibility and trust — Kingon

The reputation of Sars was tarnished under the leadership of suspended commissioner Tom Moyane following several allegations
Advertising

Subscribers only

The shame of 40 000 missing education certificates

Graduates are being left in the lurch by a higher education department that is simply unable to deliver the crucial certificates proving their qualifications - in some cases dating back to 1992

The living nightmare of environmental activists who protest mine expansion

Last week Fikile Ntshangase was gunned down as activists fight mining company Tendele’s expansions. Community members tell the M&G about the ‘kill lists’ and the dread they live with every day

More top stories

Fifteen witnesses for vice-chancellor probe

Sefako Makgatho University vice-chancellor Professor Peter Mbati had interdicted parliament last month from continuing with the inquiry

Constitutional Court ruling on restructuring dispute is good for employers

A judgment from the apex court empowers employers to change their workers’ contracts — without consultation

Audi Q8: Perfectly cool

The Audi Q8 is designed to be the king in the elite SUV class. But is it a victim of its own success?

KZN officials cash in on ‘danger pay for Covid-19’

Leadership failures at Umdoni local municipality in KwaZulu-Natal have caused a ‘very unhappy’ ANC PEC to fire the mayor and chief whip
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday