Mounting hopes for a domestic interest rate cut and the household liquidity boost from the two-pot pension fund reforms lifted South African consumer confidence in the third quarter (Q3) to a five-year high. This was driven by the high and middle-income households that stand to benefit the most from these trends.

The FNB/BER Consumer Confidence Index (CCI) rose five points in Q3 to -5, its highest level since the first half of 2019, FNB said on Tuesday, 17 September 2024.

The index remains in negative territory and below its long-term average of zero going back to 1994, which underscores the point that South African consumers are generally in a downbeat if improving mood.

But on the bright side, it was the third consecutive quarter of five-point gains, and the CCI has increased by 20 points in total since the middle of last year.

FNB said that this "... signals a pronounced improvement in consumers' willingness to spend and bodes well for the outlook for consumer spending for the remainder of the year". The primary boost to consumer confidence in Q2 was probably the cessation of the rolling nationwide power cuts dubbed "load shedding".

The latest gains in Q3 can be attributed to mounting expectations of a domestic interest rate cut and the household liquidity boost from the "two-pot" reforms that allow for an early drawdown on pension funds.

The South African Reserve Bank (Sarb) is widely anticipated to start...