South Africa’s latest Consumer Confidence Index (CCI) for the second quarter of 2019 shows a three point increase to 93, presenting a marginally more positive quarter on quarter picture for consumer sentiment in South Africa.
Nielsen South Africa Connect MD Kerith Botha says; “Despite experiencing tight financial conditions due to factors such as rising fuel and utility prices and lower personal income in real terms, South African consumers are feeling slightly more positive which has translated into the increase in their overall confidence levels.
“This is also echoed by recent Stats SA data which showed that the economy grew beyond expectations, by 3.1% in the second quarter of 2019. In addition, food price increases at major supermarkets have remained between 3% and 6%, below current consumer price inflation figures for South Africa.”
The battle of the budget
Against this backdrop, 19% of South Africans’ monthly budget allocation currently goes towards food and beverages at home, 17% to housing (rent, mortgage and utilities etc) and 10% on education. Interestingly, South Africans allocate the same amount of their budget (9%) to communication services like mobile phone landline, internet, cable tv etc and the daily grind of routine transport.
In terms of whether South Africans have any spare cash, 80% say yes. The highest number of consumers 47% (up from 45% in the previous quarter) put their disposable income into savings, followed by 34% paying off debts, credit cards and loans. Twenty seven percent of respondents said they would spend it on new clothes, while 23% said they would spend their spare cash on out of home entertainment, which may well be due to the need for a respite from the day to day realities of their lives.
Looking at how South Africans have adapted to the current wallet squeeze scenario, 84% of South Africans say they have changed their spending to save on household expenses. The top action they have taken to save on money is cutting down on takeaway meals (61%) followed by spending less on new clothes (56%) and switching to cheaper grocery brands (49%, although this is a seven point improvement over the 56% it was in the previous quarter).
In terms of their outlook, 74% South Africans think the country is currently in a recession, versus 78% in the previous quarter. When it comes to their top concerns, 30% of South Africans cite the economy as their top concern, followed by job security at 26%, crime at 21% and increasing fuel prices also at 21%.
Where to from here?
Looking to the future, there has been a one point increase in the number of South Africans who view their job prospects as excellent or good to 33%, with those who say the state of their personal finances over the next 12 months will be excellent or good, having increased by three points to 66%. There has also been a positive uptake when it comes to spending intentions, with a two point increase to 31% South African consumers who feel now is a good or excellent time to purchase what they need or want.
Commenting on this unfolding scenario Botha comments; “South African consumer sentiment is stable at present off the back of positive movement during the last three quarters. It will be interesting to see how consumer confidence and spending intentions are impacted by macro-economic factors and consumers’ personal outlook in the months to come.”