Consumer confidence extended gains in the first quarter of 2026, reaching the strongest level in more than a year due to stronger sentiment among high-income earners.
Sentiment should, however, turn negative in the second quarter as the war in the Middle East drives transport and other costs sharply up, eating into household disposable income.
The consumer confidence index, compiled by First National Bank (FNB) and the Bureau for Economic Research (BER), was at minus seven index points in the first quarter, having recovered from minus 13 to minus nine points in the last three months of 2025.
The latest print is the highest since the fourth quarter of 2024, when the government introduced the two-pot retirement savings system, which allowed households to withdraw about R40bn from their pension fund savings.
The two-point increase was mainly due to a jump in the confidence levels of high-income consumers, in which sentiment improved from minus 12 to minus four. Affluent households benefited not only from two-pot pension fund withdrawals but also from declining interest rates, soaring stock prices and a stronger rand exchange rate.
But the report says the fieldwork for the survey was completed before the US launched its military operation against Iran on February 28, sparking upheaval in global oil markets, which has seen prices repeatedly breach the $100 a barrel mark in recent weeks.
“Unfortunately, the ripple effects from the Iranian war may well see a U-turn in high- and middle-income confidence during the second quarter,” FNB chief economist Mamello Matikinca-Ngwenya said.
Income brackets
The latest survey shows divergent confidence trends across income groups, with high-income respondents earning more than R20,000 a month raising their rating of the outlook for their household finances to its highest level since the second quarter of 2019.
This income bracket of consumers was also the only group that registered an improvement in their rating at the present time to buy durable goods.
The confidence levels of middle-income households earning R5,000-R20,000 a month edged up by one index point to minus seven, with respondents expecting their household finances to improve over the next 12 months.
In contrast, the confidence levels of low-income consumers earning less than R5,000 a month deteriorated by four index points to minus 12.
“Disappointing employment growth towards the end of 2025 and tighter compliance measures in the social grant system in all likelihood punctured the confidence levels of low-income households,” Matikinca-Ngwenya said.
Data from Stats SA shows that only 44,000 jobs were created in the fourth quarter of last year and the national Budget Review tabled in parliament last month showed that nearly 35,000 social grants were cancelled and 8,600 more adjusted, leading to lower social grants payments of more than R200m in the 2025/26 financial year.
Oil price peril
Steep transport costs lie ahead for South African consumers from April due to higher global oil prices, with the latest estimates from the Central Energy Fund showing that the price of 95-grade unleaded petrol will surge by about R5.62/l from April, in the absence of any measures by the government to cushion consumers from the blow.
Adding to the pain for lower-income earners, the price of illuminating paraffin, still used in many households for lighting and cooking, is on track to rise by R11.25/l.
“The effects of higher oil prices from the war in the Middle East will have a negative impact on consumer sentiment, [with] an acceleration in inflation from its current 3% year on year,” Investec economist Annabel Bishop said.
“Higher fuel prices negatively affect travel, industry and GDP growth, with household consumption expenditure making up two-thirds of GDP. The quicker the war ends the more limited the impact would be on consumer confidence.”
Local consumers are likely to feel the first impact of the war on Thursday, when the Reserve Bank is expected to keep interest rates unchanged, changing course after having been widely expected to cut them by 25 basis points.
Three questions were posed to respondents in the consumer confidence survey: the expected performance of the economy, the expected financial position of households and how they rate the appropriateness of the present time to buy durable goods such as furniture, appliances and electronic equipment.
It is expressed as a net balance of the percentage of respondents expecting an improvement/good time to buy durable goods against the percentage expecting a deterioration/bad time to buy durable goods.
A low level of confidence indicates consumers are concerned about the future and may be worried about job security, leading them to restrict spending to necessities such as food to free up income for debt repayment.
If confidence is high, consumers tend to incur debt and increase spending on furniture, household equipment, motor vehicles, clothing and footwear, often financed on credit.
• This story was updated with new information on March 24 2026.
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