The Credit Suisse Research Institute has published its sixth annual Emerging Consumer Survey – a detailed study profiling consumer sentiment and its drivers across the emerging world. South Africa once again ranks at the low end of a range of the survey’s indicators with continued disparities between income groups.
The 2015 survey shows a marked decline in overall consumer confidence, and not only has the gap between high and low-income groups increased but much reduced optimism in the middle income groups was also evident. A net 4% of respondents expected their personal finances to improve over the next six months, considerably lower than 11% last year.
Inflation expectations are elevated and a net 65% of respondents expected higher inflation, compared with the survey average of 46%. This contrasts with only a net 1.5% of consumers anticipating increased income over the next 12 months.
The majority of consumers still did not believe that now was a good time to make a major purchase, although sentiment was less negative than last year. Perhaps surprisingly, those who stated that they had no extra money for saving declined from 38% to 30%, putting South Africa below the survey average of 32%. There remain large disparities between low and high-income earners, which further increased in 2015.
Of note was a marked deterioration in the optimism of the low-income group (monthly incomes below ZAR 3,000), with a net 16% anticipating that the state of their personal finances would deteriorate, compared with 6% the year before.
South African consumers face multiple challenges in 2016, with higher inflation due to severe drought conditions and a weak currency, as well as likely interest rate increases demanding higher shares of already constrained disposable incomes.
The prospect of job cuts in the mining industry looms large, and will likely place further pressure on low-income households. Mid- and higher-income households will likely face further interest rate hikes this year and, combined with currency weakness, constrain purchases of higher-end, often imported products.