Consumer Confidence in South Africa is Deteriorating Because of Ukraine Conflict

Concerns over the economic consequences of the Ukraine conflict reduced consumer confidence in South Africa in the first quarter of 2022.

FirstRand’s First National Bank stated in an emailed statement Thursday that a quarterly sentiment index declined to -13 from -9 in the previous three months.

That’s the lowest level since the second quarter of 2021, when the government temporarily stopped a welfare stipend for those impacted by the coronavirus pandemic’s aftermath and strengthened lockdown restrictions to stem the spread of the disease’s Delta form.

According to FNB, the newest result is much lower than the average consumer-confidence level of 2 since 1994, indicating a low propensity to spend or greater caution among consumers. The drop in the index was mostly caused by de The conflict and broad sanctions against Russia, the world’s second-largest oil exporter, have upended Black Sea crude and wheat supplies at a time when global reserves are already low, driving up prices. Ukraine and Russia ship over a fifth of the world’s wheat, and the war has shut down ports and halted transportation.

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Due to the conflict, FNB has revised its average inflation projection for 2022 to 5.6 percent, down from 4.6 percent, and its economic growth estimate to 1.7 percent, down from 2.2 percent previously.terioration in the economic outlook and household financial situation of high-income households earning more than R20 000 per month, according to the report.

“Affluent consumers are now far more negative about the prospects for the economy and their household finances than low-income households, despite consumer sentiment being dismal across all three income categories,” the bank stated.

South Africa’s central bank is expected to raise interest rates at its final five meetings of the year, putting the benchmark rate at 5.25 percent by the end of 2022, up from 4 percent now.

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