After a year marked by cautious spending and economic uncertainty, South Africans appear ready to loosen their purse strings — at least a little — for the holidays.
The FNB/BER Consumer Confidence Index (CCI) climbed to its highest point this year in the fourth quarter (-9, up from -13 in the third quarter). Although sentiment remains below the long-term average of -1 and lags the 2024 festive season reading of -6, the latest results mark a welcome improvement in South Africans’ willingness to spend after a difficult year.
The 500 respondents surveyed are representative of South Africa’s urban adult population in terms of race and household income.
“Apart from a further interest rate cut and an appreciation in the rand exchange rate, a number of other positive developments likely buoyed consumer sentiment towards the end of the year,” said FNB chief economist Mamello Matikinca-Ngwenya.
“These include a 47c per litre decline in the petrol price between August and November, food inflation easing from 5.5% in July to 3.9% by October and a 248,000 jump in employment during the third quarter of 2025,” she said, adding the sovereign rating upgrade by S&P and the country’s removal from the Financial Action Task Force greylist.
These developments, combined with November’s 25-basis-point interest rate cut, have lifted household optimism and improved consumers’ ability to spend heading into the holiday season.
All three subindices improved on a quarterly basis. The sub-index measuring the appropriateness of the present time to buy durable goods jumped from -20 to -14, its best level since 2019. The economic outlook sub-index also edged up from -22 to -19, while the household finances component improved from 3 to 5 index points.
“The economy is beginning to see some of its structural challenges worked down,” said Investec economist Lara Hodes. “These challenges have been impeding optimal economic activity and export potential, and so job creation.”
Confidence among middle-income households (those earning between R5,000 and R20,000 per month) recovered sharply, from -16 to -8, after a steep decline earlier in the year. Low-income households (earning below R5,000) inched up slightly from -9 to -8, while high-income households (above R20,000) were a bit more pessimistic, with sentiment dipping to -12.
Retail sales volumes rose an average of 3.9% year on year during the first three quarters of the year, and the improvement in consumer sentiment suggests that consumers’ appetite to spend extended into the holiday season.
“These developments suggest that retail tills will jingle a merry tune during the 2025 festive season, with sales volumes projected to exceed the already jolly numbers recorded during the 2024 holiday period,” said Matikinca-Ngwenya.
However, the report cautioned that annual real consumer spending growth is likely to slow in the final quarter, largely because it will be compared against an exceptionally strong base a year ago — when the rollout of the two-pot retirement system temporarily boosted household spending.
Overall, confidence also remains subdued by historical standards. The -9 reading still implies that more consumers are pessimistic than optimistic about South Africa’s economic prospects.
But sentiment remains better than expected.
“A positive outlook for the rand and declining interest rates, supported by a favourable inflation trajectory, suggest that consumer confidence should strengthen further in 2026,” said Oxford Economics senior economist Jee-A van der Linde
“Household consumption has so far performed better than expected in 2025 —forecast to grow by 3.1% this year compared with 1.0% in 2024 — supported by stronger real earnings growth. Although household consumption should remain a key driver of near-term GDP growth, we expect a gradual moderation in consumption growth over the course of 2026. Following the latest GDP figures, we have slightly increased our economic growth forecasts for 2025 (to 1.3%) and 2026 (to 1.4%),” he said.
The survey measures consumer sentiment through three key questions: respondents’ expectations for the performance of the economy, their own household finances, and whether they consider it an appropriate time to buy durable goods such as furniture, appliances and electronic equipment.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.