(Reuters) – South Africa’s consumer confidence dropped during the first quarter of 2022, a survey showed on Thursday, after Russia’s invasion of Ukraine dampened sentiment and increased caution among investors.
The consumer confidence index (CCI), sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, slipped to minus 13 during the first quarter from minus 9 in the prior quarter.
The latest reading remains well below the long-run average CCI reading of +2 since 1994.
“The marked decline in the confidence levels of affluent consumers can largely be explained by the alarming images of Russia’s military invasion of Ukraine, unprecedented sanctions against Russia and the unfolding economic ramifications of this conflict,” FNB Chief Economist Mamello Matikinca-Ngwenya said.
Russia’s invasion of Ukraine, which Moscow says is a “special military operation”, and concerns over inflationary pressures and deterioration in the global economic outlook have triggered fears among South African consumers, the survey said.
Along with soaring oil prices, global wheat prices are likely to spill over into higher food inflation, while economists expect another interest rate hike at the end of March, according to the survey.
“Falling consumer confidence levels signal a decreased willingness to spend among households, while higher inflation will also erode their purchasing power, or ability to spend,” added Matikinca-Ngwenya.
(Reporting by Shanima A in Bengaluru; Editing by Sherry Jacob-Phillips)
