Consumer sentiment declined in the third quarter, driven by a middle class under increasing strain, according to the FNB/BER consumer confidence index.
The report released on Thursday by First National Bank and the Bureau for Economic Research shows that confidence deepened to minus 13 from minus 10 in the second quarter, signalling a likely slowdown in household spending.
The decline was led by middle-income households — those earning R5,000-R20,000 a month — whose confidence collapsed from minus 7 to minus 16. The report notes that this group is under increasing pressure from rising food prices, poor job prospects and the fading boost from one-off pension withdrawals — factors that could weigh on retail sales in the months ahead.
In contrast, confidence among low-income households improved due to above-inflation social grant increases, while the mood in high-income households held steady thanks to lower debt costs, stronger equity markets and a firm rand.
“Weak job creation, rising inflation and dwindling two-pot funds have likely started to weigh on the confidence levels of the middle class,” FNB chief economist Mamello Matikinca-Ngwenya said.
According to the BER, retail and wholesaler confidence also weakened in quarter three, signalling softer demand ahead. Retail confidence fell to 32% from 42% — below its long-term average — while wholesale confidence dropped to 38% from 50% after five strong quarters. In contrast, new-vehicle dealer confidence jumped 12 points to 54%, the highest level since 2022.
Household spending growth eased to 2.8% in the second quarter from 3.2% in the first three months of the year, and analysts expect a sharper slowdown towards the end of the year.
Though durable goods and high-end retailers may show resilience, broader consumer demand is likely to soften without further rate cuts or a rebound in employment.
Analysts at Oxford Economics said the weaker consumer sentiment points to slower household consumption in the second half of the year.
“The decline in consumer sentiment comes at a time when CPI inflation is trending higher, and the Reserve Bank has recently paused its cutting cycle,” they said. Rising unemployment and global trade challenges, including the impact of a 30% US import tariff, are likely to weigh further on demand, they said.
Momentum’s latest Consumer Pulse report shows that household spending, which accounts for more than 60% of GDP, will be critical to the growth outlook. Momentum cut its 2025 consumption forecast slightly to 1.7%, with GDP growth expected at just 1%.
Unemployment rose to 33.2% in the second quarter, with job losses concentrated in semi- and low-skilled segments. Skilled employment growth and firmer house prices (up 4.5% year on year in August) may help cushion spending among higher earners, but Momentum warned that poor municipal service delivery and rising community protests are compounding the negative outlook.
SA ranks 25th out of 30 countries based on consumer confidence, according to multinational market research and consulting firm Ipsos.
Update: September 25 2025
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