Slight improvement in consumer confidence

The index improved by one point in the first quarter of 2014 but remains near a decade low of -8.

The latest consumer confidence figures show that South Africans are still extremely cautious about the economy and spending. Picture: File.

JOHANNESBURG - South Africa's consumer confidence index improved by just one point to -6 in the first quarter of 2014, only two points above the decade low reached in the third quarter of last year.

Survey conductors FNB and the Bureau for Economic Research say a slowdown in household credit extension and disposable income growth suggests consumer spending will remain soft throughout the first half of 2014.

The index has consistently trended lower since peaking at +15 index points during the 2010 FIFA World Cup.

FNB Chief Economist Sizwe Nxedlana says the result is not surprising given January's interest rate hike, coupled with tight credit standards.

Speaking to The Money Show's Bruce Whitfield on Wednesday, Nxedlana said consumers are "very worried" about the outlook of the economy.

Inclination to make large purchases is at its lowest level since the 2008/9 recession, he added.

Nxedlana says it's now clear that the South African Reserve Bank is set to further increase interest rates in the near future, while inflation is also edging up, meaning consumer confidence is likely remain low in the short-term.

Furthermore, as quantitative easing in the United States decreases in the long-term, the rand is likely to take further hits, he says.

Listen to The Money Show's Bruce Whitfield's full interview with Nxedlana.