Many consumers are still willing, if not able, to shop up a storm
Optimistic blacks buoyed pessimistic Afrikaners to limit an expected drop in consumer confidence to just three points, a quarterly survey by First National Bank and the Bureau for Economic Research shows.
An overall consumer confidence index of +18 for the third quarter of this year comes from averaging a spectrum ranging from -5 for Afrikaans-speakers to +30 for Sotho-speakers.
Consumer confidence among Afrikaners fell eight points versus six for English-speakers whose index is +13. The consumer confidence index of Nguni-speakers increased one point to +19.
"Consumer confidence today has only retreated to the level of the fourth quarter of 2006 and is still apparently very robust," FNB chief economist Cees Bruggemans said.
This is despite a series of setbacks, such as two more interest rate hikes in June and August, problems with the implementation of the new Credit Act, the rising inflation rate especially in food, the decline in vehicle sales and a steadily more hesitant property market, and the financial market turmoil of August, overseas but affecting our stock market.
"What has probably eroded more in recent months is consumers' ability to spend rather than their willingness to do so, at least so far," he said.
White consumer confidence fell the most, easing six points to +3, only a slim majority expressing confidence now, and 13 points down from the peak.
White's own financial prospects, however, eased only two points to +13 and their views of the economy fell more decisively to -4.
In contrast, black consumer confidence eased only one point to +25, effectively remaining at the cyclically high plateau of the past two years. Black consumers also continue to view their own financial prospects very positively at +29.
Only their view of the economy clearly deteriorated, but remained a high +28.
The Reserve Bank has raised its repo rate by 3percent since June last year, taking it to 10percent after hikes in June and August this year to tackle rising inflation, driven partly by robust consumer spending.
Analysts are divided on whether it will raise rates again tomorrow.