The South African consumer, who has been responsible for approximately 60% of GDP growth since 2000, is currently impacted by negative forces including inadequate job creation and naggingly persistent inflation. Positive forces include a resilient upper-income consumer; a low interest rate environment; and, possibly, improving consumer indebtedness. The lower petrol price has been a welcome, but likely temporary, boon to the country’s inflation rate and level of consumer spending.
The direction and rate of the future interest rate cycle will likely have a material impact on middle-income customers. Declining Food inflation suggests some relief for lower- and middle-income customers, although the likely anticipated sugar price increase will have a secondary price effect in food and beverages.
Ongoing power outages will have an adverse impact on the South African economy as manufacturing processes and plants are compromised; large and small electrical motors burn-out from frequent stop-starts and need to be replaced; labour scheduling becomes uncertain and expensive; and product wastage, from interrupted manufacturing and storage processes, escalates. Business and private consumers will pay directly and indirectly for this.