Consumer confidence drops to its lowest level in 2 years

JOHANNESBURG - Consumer confidence has taken a dip, dropping to its lowest level in two years amid worries about the high cost of living.  

A tax increase is among the top factors weighing on moods in the latest Consumer Confidence Index published by FNB and the Bureau for Economic Research.  

The souring of diplomatic relations between South Africa and the United States (US) and the knock-on effects of the trade wars triggered by US President Donald Trump also likely contributed to the extraordinary deterioration in sentiment in the first quarter of 2025.  

The Consumer Confidence Index plunged from -6 to -20 index points during the first quarter of 2025.  

The survey was conducted days after the aborted budget in February, where a 2-percentage point value-added tax (VAT) increase was first touted.  

Although the proposal softened in Budget 2.0 in March, the prospect of higher taxes – either via VAT hikes or further bracket creep on the personal income tax front – likely alarmed many consumers.  

The 14-point plunge in the index is on par with the dramatic drop in consumer confidence when South Africa entered stage 6 load shedding for the first time in the first quarter of 2023.  

The vast majority of high-income households now expect SA’s economic performance and their household finances to deteriorate over the next twelve months – a complete turnabout from their expectations just three months ago.