Consumers under pressure: What’s needed to boost confidence

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JIMMY MOYAHA: The latest Consumer Confidence Index was released today, 23 June 2026, and it points to South Africans being nervous about the Middle East tensions and the state of the South African economy – among other things.

We’re going to look at this in more detail with independent economist John Loos. He joins me on the line now to see what we make of the data.

John, lovely having you on our show, as always. Thanks so much for taking the time. The inflation print from a South African perspective has come in at 4.5% – the most recent print. Let’s perhaps start the conversation there.

That is not doing much to boost consumer confidence. I imagine that was not the only number taken into consideration here, but consumer confidence levels are definitely not at their best if we’re looking at where they are at the moment.

JOHN LOOS: Look, Jimmy, even in the first quarter, before the outbreak of the Iran conflict, at minus seven, it wasn’t a strong consumer confidence figure. But at minus 19 in the second quarter, it is a lot weaker.

There was the direct impact on petrol prices, and a big rise as a result of the war around Iran and the Strait of Hormuz and the oil price surge, and that’s fed through into general inflation, taking it from zero to 3%, up to 4.5% quite quickly. That eats into disposable income.

Read: SA consumer mood darkens as Iran war hits fuel prices

At the time of the survey, many respondents might not yet have experienced the interest-rate hike, but the fears of the interest-rate hike and the talk of the interest-rate hike were already there, well before the Reserve Bank hike at the end of last month.

So that’s the next obvious fear for consumers – when inflation surges is when interest rates are going to go up.

So all in all, much of the deterioration in consumer confidence, I think, has to do with the whole Iran conflict and the surge in oil and fuel prices.

JIMMY MOYAHA: John, let’s take a look at the South African story in a bit more detail, zooming in on that inflation print. Our inflation levels for all that we’ve gone through – even throughout the Covid-19 pandemic, not exceeding the 7%, 8% or 9% levels – we are back at 4.5%, which in the old framework would have been exactly where we wanted to be from a midpoint perspective.

We know we’ve revised that midpoint down, or the ideal targets down to 3%. At 4.5% are we really that concerned around the state of our inflation and how it’s going to filter into the market?

JOHN LOOS: Look, I don’t think it’s an inflation shock, that’s for sure. I think we could go up slightly to above 5% before all is said and done.

But with food prices now coming off and it looking like we’re heading towards some sort of resolution of the conflict in the Middle East – after next month’s interest-rate meeting, where I think the Reserve Bank might hike one more time, we’re looking probably at an improving inflation situation not too far from now.

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So no, I don’t think it’s a serious, a major inflation shock.

But I think what we need to bear in mind is that many South Africans, especially those on the lower income side, cannot take an awful amount of inflation, because unemployment is high as it is, and incomes have been under pressure for quite some time.

The economy has been relatively stagnant for quite some years, so it doesn’t take much to cause consumer confidence to deteriorate.

A bit of inflation, an interest rate hike or two, and suddenly, many South Africans are under pressure quite quickly.

JIMMY MOYAHA: John, if we think about the confidence levels at the moment from a South African perspective – and you touched on the fact that unemployment is a factor here – and we start to compare our economy against other global economies, yes, we’ve seen a positive ratings upgrade from the rating agencies.

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But without economic growth, none of these conversations effectively mean anything for the consumer and for the average South African, because economic growth is where the jobs are created, where the standard of living is improved.

How do we start to balance, or at least reconcile consumer confidence with what should be economic growth with what is economic growth?

JOHN LOOS: Well, I think the consumer is probably going to be in a week-confidence situation for a few years because, while we are making the structural reforms slowly – and by that I mean government has taken steps to fix the electricity supply – it is a lot better than a few years ago.

And now there are efforts to fix the Transnet part of the economy, the ports and the logistics.

So there are moves afoot to start reforming the economy. But those structural reforms will probably take some years before the impacts are felt.

What government does need to do – it still has a very weak infrastructure budget, a capex budget, which needs to be lifted. It will be some years before we see noticeable upgrades in general infrastructure in the country.

So while the thinking is starting to go in the right direction – and that is what the rating agencies will be seeing – it will take some time before it feeds through en masse to the consumer, to the household sector of the economy in terms of significantly higher employment and income numbers.

JIMMY MOYAHA: John, before I let you go, I want to take a look at some of the external factors that could potentially dampen consumer confidence.

We know that the deterioration has been largely due to some of the pressures consumers have been under – and part of those pressures have included conversations like Vat increases.

We know that at this point we are itching closer to a mid-term budget policy statement that has promised a fiscal anchor, among other things.

Where do consumers need relief from the government, from the external parties? And where do consumers not need added pressure?

JOHN LOOS: I think the relief that consumers need is probably indirect – it is by those structural reforms to get this economy growing far faster and by creating far more jobs.  That’s really where it has to go.

It’s not up to government to directly provide income and directly provide a lot of relief for consumers. It can provide relief with better economic policy that makes job creation grow faster.

But there are some areas where I think consumers desire relief.

Those are at local government level in terms of the municipal rates and tariff increases that continue at rapid rates well above inflation. There I think, it needs to come to land at some point before electricity costs become almost prohibitive.

There are areas of government driving inflation well above the overall inflation rate, where you would hope that at some point these rates would moderate to be back in line with the low inflation levels.

And then infrastructure. As I say, I think that’s where confidence can be boosted dramatically.

I think there’s nothing better than if consumers and households look around and start seeing roads repaired; besides electricity supply doing better, service delivery in general doing better; and a lot of infrastructure being upgraded.

We’re some way away from noticeable impacts on infrastructure, but I think that’s where you can provide the fertiliser for far greater consumer confidence.

Having said that, I do think that, once this conflict is over and petrol prices start to go down – which they may well do next month – consumer confidence could improve in the third quarter somewhat from the minus 19, which is probably still a negative value. But I think this conflict looks like it’s not going to be around for too much longer.

JIMMY MOYAHA: Consumer confidence is in desperate need of a boost and a restoration. We will see whether that comes through.

For now, though, we will have to hold on to the fact that the economy is in dire need of assistance. We are on the right track, but we could definitely be moving at a much faster pace.

Independent economist John Loos joined us to look at consumer confidence in South Africa and where we go from here.