Consumer confidence recovered further in the third quarter to its best since 2019, helped by improved willingness to spend and hopes of an interest rate cut in September, survey data released on Tuesday showed.

The consumer confidence index, sponsored by First National Bank and compiled by the Bureau for Economic Research, improved to -5 points in the quarter from -10 in the previous three months.

“A confluence of positive developments has bolstered the confidence levels of South Africa’s more affluent consumers over the last six months,” FNB chief economist Mamello Matikinca-Ngwenya said.

The Reserve Bank is due to announce its rate decision on Thursday, with economists expecting a 25 basis point cut as inflation slows, according to a Reuters poll.

Besides the deceleration in inflation, the formation of the government of national unity, the absence of load shedding, a stronger rand exchange rate and substantial fuel price declines have also contributed to improving consumer confidence.

“Moreover, the implementation of the two-pot retirement system on 1 September now allows consumers access to a portion of their retirement savings, which will no doubt hearten households experiencing financial distress,” Matikinca-Ngwenya said.

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However, while confidence among high-income and middle-income households improved, low-income households showed weakness as the lack of pension funds and debt that is tied to the prime interest rate minimises the impact of the two-pot policy and possible rate cuts. — Prerna Bedi, (c) 2024 Reuters