Consumer confidence in South Africa hits 2-year low amid tax hike proposal

Significant drop highlights a grim outlook for consumers grappling with higher taxes and economic uncertainty

- SIPHELELE DLUDLA

SENTIMENT among shoppers in South Africa has plunged to its lowest point in nearly two years as consumers were shaken by the recent budget proposal to increase the value-added tax (VAT).

The latest FNB/BER Consumer Confidence Index (CCI), released on Tuesday, revealed a steep decline to -20 for the first quarter of 2025, down from -6 in the previous quarter, marking a troubling trend as sentiment has now fallen for two consecutive quarters.

This significant drop, the lowest recorded since the second quarter of 2023, highlights a grim outlook for consumers grappling with higher taxes and economic uncertainty.

The fieldwork for the first quarter CCI survey commenced only days after the Finance Minister Enoch Godongwana’s (aborted) proposal to hike VAT by two percentage points came to light.

The index's three sub-indices also reflected this downward spiral, with the economic outlook sub-index nosediving from -9 to -32 index points.

This substantial reversal negates nearly all progress that had been made following improvements in electricity supply and the formation of the Government of National Unity (GNU) in mid-2024.

The household finances sub-index mirrored this decline, falling from 11 to a precarious -1.

Meanwhile, another sub-index measuring the appropriateness of the present time to buy durable goods—such as vehicles, furniture, and appliances—retreated further from -21 to -28.