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JIMMY MOYAHA: The most recent Consumer Confidence Index was released today, June 23, 2026, indicating that South Africans are feeling uneasy due to rising tensions in the Middle East and the ongoing economic situation in South Africa, among other factors.
We will explore this further with independent economist John Loos, who is here to discuss the data with us.
John, it’s great to have you on our show again. Thank you for being here. The latest inflation figure from a South African viewpoint is currently at 4.5%. Let’s start our conversation from there.
This doesn’t seem to boost consumer confidence much. I assume there were other figures contributing to the results, but it’s evident that consumer confidence is not at its best right now.
JOHN LOOS: Absolutely, Jimmy. Even in the first quarter, before the Iran conflict began, the consumer confidence was at minus seven, which wasn’t robust. Now, at minus 19 for the second quarter, we’re even lower.
The ongoing conflict has directly affected petrol prices, and as oil prices surged, we witnessed a rapid increase in general inflation, jumping from zero to 3% and then to 4.5%. This trend is squeezing disposable income.
Read: SA consumer sentiment dims as Iran war affects fuel prices
During the survey period, many respondents may not have yet felt the impact of the interest rate hike, but discussions regarding this hike were already circulating before the Reserve Bank raised rates at the end of last month.
Therefore, consumers are now primarily concerned that rising inflation typically leads to increased interest rates.
The noticeable drop in consumer confidence can largely be linked to the Iran conflict and the subsequent rise in oil and fuel prices.
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JIMMY MOYAHA: John, let’s take a closer look at the South African situation, particularly concerning the inflation figures. Despite our struggles, including the Covid-19 pandemic, inflation has remained below 7%, 8%, or 9%. Now, at 4.5%, this generally represents our desired midpoint.
We are aware that the target has been adjusted to 3%. Should we genuinely be concerned about our inflation rate and its influence on the market?
JOHN LOOS: I wouldn’t classify it as an inflation shock, that’s for sure. We might see a slight rise above 5% before it stabilizes.
Nevertheless, with food prices decreasing and prospects for a resolution to the Middle Eastern conflict, I expect that after next month’s interest rate meeting—where I believe the Reserve Bank may raise rates again—we’ll start to see an improved inflation scenario soon after.
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Therefore, I don’t consider it to be a major inflation shock.
That being said, it’s critical to recognize that many South Africans, particularly those with lower incomes, struggle with inflation due to persistent high unemployment and stagnant wages.
The economy has been largely stagnant for several years, making even minor stresses capable of rapidly diminishing consumer confidence.
A slight increase in inflation or a few interest rate hikes can quickly put a lot of pressure on many South Africans.
JIMMY MOYAHA: Given the current consumer confidence levels in South Africa, as you mentioned, the unemployment situation is a vital factor. Comparing our economy to others globally, we’ve received a favorable ratings upgrade from agencies.
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However, without genuine economic growth, these discussions are of little importance to consumers and the average South African, as economic growth is vital for job creation and improved living standards.
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How can we align consumer confidence with the expected economic growth versus the current reality?
JOHN LOOS: I believe consumers will likely find themselves in a prolonged period of weak confidence. While we are gradually implementing structural reforms—like tackling electricity supply issues which have improved compared to a few years back—there are ongoing efforts to enhance Transnet’s operations, ports, and logistics.
There are movements towards reforming the economy, but these structural changes will take time to bear fruit.
The government still faces obstacles, especially with a weak infrastructure and a capital expenditure budget that must be significantly increased. We likely won’t witness substantial infrastructure upgrades for several years.
Though there’s a change in mindset—something rating agencies are likely taking note of—it will take time for these changes to yield economic benefits for consumers and households, particularly in terms of employment and income growth.
JIMMY MOYAHA: As we conclude, let’s consider some external factors that might affect consumer confidence.
We know the decline in confidence has primarily arisen from consumer pressures—including conversations about VAT increases.
With a mid-term budget policy statement approaching that is expected to introduce a fiscal anchor, what relief can consumers expect from the government and external parties? And where should additional burdens be mitigated?
JOHN LOOS: I think consumers need indirect relief—mainly through structural reforms that stimulate faster economic growth and job creation. That’s the primary path we should pursue.
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It’s not the government’s responsibility to directly provide income or extensive relief for consumers. Instead, it should establish conditions for better economic policies that facilitate job creation.
However, there are certainly areas where consumers are seeking relief.
These encompass municipal rates and swift tariff increases that continually outpace inflation. Addressing these is essential before electricity costs become excessively burdensome.
There are specific government practices pushing inflation beyond the overall rate, where we hope to eventually align these rates with lower inflation levels.
Moreover, infrastructure improvements are crucial; visible advancements such as repaired roads and better service delivery will significantly contribute to restoring consumer confidence.
While visible improvements may take time, they are pivotal to fostering greater consumer confidence.
That said, I do believe that once the conflict concludes and petrol prices begin to decline—possibly as soon as next month—consumer confidence may see an uptick in the third quarter, moving up from the current minus 19, which still indicates a negative sentiment. It appears that this conflict may not last much longer.
JIMMY MOYAHA: Restoring consumer confidence is crucial, and we’ll see if that change occurs.
At the same time, we must recognize the economy’s urgent need for support. We are moving in the right direction, but there is certainly room to accelerate our progress.
Independent economist John Loos has joined us to discuss consumer confidence in South Africa and the future outlook.
