Consumers in the doldrums

Most consumers are pessimistic about the country's immediate future.

The Consumer Confidence Index fell by two points in the fourth quarter, figures released by First National Bank and the Bureau for Economic Research showed yesterday.

Cees Bruggemans, FNB's chief economist, said the growth in household consumption expenditure was likely to remain subdued next year.

Bruggemans said consumers' appetite for goods had been the mainstay of economic growth for the past two years.

"At minus 3, consumer confidence remains weak and not supportive of strong growth in consumer spending," he said.

This year, consumers were again hit by price increases in electricity and fuel. Though inflation has officially been within the Reserve Bank's target of 3% to 6%, in reality consumers'spending priorities do not correspond with the goods and services in the basket used to calculate Statistics SA's Consumer Price Index.

Purchasing power is being further eroded by rapidly rising food prices and the weakening rand, which has lost 15% against the dollar since March.

The sub-index that looks at appetite for buying durable goods fell by four points to a three-year low of minus 12.

"The decline in the index since the beginning of the year indicates that consumers are becoming more cautious about purchasing durable goods, which correlates with the deceleration in sales growth reported by retailers of furniture and household appliances since the end of 2011," said Bruggemans.

According to the figures released by FNB and the Bureau for Economic Research, consumer confidence "remains at levels last witnessed at the onset of the global financial crisis in the second half of 2008".