SA consumer confidence hurt by rates

JOHANNESBURG – South Africa’s consumers are increasingly uncertain about the future as higher interest rates and prices eat into disposable income, a survey showed yesterday.

The central bank has raised interest rates by five percentage points since June 2006 in an effort to fight inflation that has stayed outside its 3-6 per cent target band since April 2007, hitting a five-and-a-half year peak of 10,9 per cent year-on-year in May. The twice-yearly MasterCard Worldwide Index of Consumer Confidence fell to 74,3 in the second half of 2008 from 83,7 in the first half of the year, one of the greatest declines since its launch in 2004.”It is my opinion that the golden era of consumer confidence in South Africa is beginning to lose its shine,” said Mike Schussler, Chief Economist at T-Sec.”While it is important to note that the Index is still positive, the fact remains that the Index dropped by …9,4 points in the last six months.This makes South Africa the third-least optimistic of the eight countries surveyed.”The surveyed included Egypt, India, Kuwait, Lebanon, Qatar, Saudi Arabia, South Africa and the United Arab Emirates.Retail sales have shrunk in response to higher interest rates – falling by 3,6 per cent year-on-year at constant prices in May – and analysts see this gauge of household demand remaining dismal for the rest of the year.Nearly half (48 per cent) of the survey respondents said they expected economic performance to remain the same or to worsen over the next six months.Nampa-ReutersThe twice-yearly MasterCard Worldwide Index of Consumer Confidence fell to 74,3 in the second half of 2008 from 83,7 in the first half of the year, one of the greatest declines since its launch in 2004.”It is my opinion that the golden era of consumer confidence in South Africa is beginning to lose its shine,” said Mike Schussler, Chief Economist at T-Sec.”While it is important to note that the Index is still positive, the fact remains that the Index dropped by …9,4 points in the last six months.This makes South Africa the third-least optimistic of the eight countries surveyed.”The surveyed included Egypt, India, Kuwait, Lebanon, Qatar, Saudi Arabia, South Africa and the United Arab Emirates.Retail sales have shrunk in response to higher interest rates – falling by 3,6 per cent year-on-year at constant prices in May – and analysts see this gauge of household demand remaining dismal for the rest of the year.Nearly half (48 per cent) of the survey respondents said they expected economic performance to remain the same or to worsen over the next six months.Nampa-Reuters