{"id":838301,"date":"2025-09-25T12:00:00","date_gmt":"2025-09-25T10:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=838301"},"modified":"2025-09-25T11:41:09","modified_gmt":"2025-09-25T09:41:09","slug":"south-africas-middle-class-is-cracking","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/838301\/south-africas-middle-class-is-cracking\/","title":{"rendered":"South Africa’s middle class is cracking"},"content":{"rendered":"\n

South Africa’s Consumer Confidence Index (CCI) recorded another decline for the third quarter of the year, driven by tanking sentiment among the country’s middle class.<\/p>\n\n\n\n

The CCI, compiled by the Bureau for Economic Research (BER) and FNB, was recorded at -13 for the third quarter, down further from -10 in Q2, though still above -20 at the start of the year.<\/p>\n\n\n\n

The index is tracking well below the -1 average recorded since 1994.<\/p>\n\n\n\n

According to the BER, consumer confidence in the first quarter of the year was driven by a confluence of negative impacts.<\/p>\n\n\n\n

This included the initial proposal to hike VAT by two percentage points, the fallout between the ANC and the DA about the budget, and a deterioration in diplomatic relations between South Africa and the United States.<\/p>\n\n\n\n

Absent most of these impacts in the third quarter, the reading of -13 is relatively bleak for the country, reflecting economic pressure on consumers.<\/p>\n\n\n\n

Across the three sub-indices tracked by the BER, consumer confidence in the country’s economic outlook is most negative, currently sitting at -22.<\/p>\n\n\n\n

This is lower than the -18 in Q2, but higher than the -32 recorded at the start of the year.<\/p>\n\n\n\n

While South Africa’s economy has remained surprisingly resilient this year in the face of many external headwinds\u2014including a 30% tariff on exports to the USA\u2014growth remains anaemic.<\/p>\n\n\n\n

The second quarter GDP figure came in at 0.8% growth quarter-on-quarter, reigniting hopes for a full-year growth figure above 1%. <\/p>\n\n\n\n

However, with population growth exceeding this by some margin, South Africa continues to get poorer, and the country is struggling to get out of the sub-1% growth rate rut it has been in for over a decade.<\/p>\n\n\n\n

This reflects wider in the durable goods sub-index, which is also sitting -20. This reflects a lack of confidence among consumers in making big, long-term purchases. <\/p>\n\n\n\n

This has only been marginally supported by lower interest rates\u2014improving from -21 in Q2\u2014reflecting the continued strain consumers face by the Reserve Bank’s reluctance to cut rates.<\/p>\n\n\n\n

The only sub-index that is positive is the household financial outlook, which, at +3, reflects some degree of confidence that finances will improve in the coming months.<\/p>\n\n\n\n

However, this also comes with a caveat that the sub-index is lower than the +9 recorded in Q2 and only marginally higher than the -1 in Q1.<\/p>\n\n\n\n

More broadly, the index points to a slowdown in real household consumption expenditure growth during 2025Q3.<\/p>\n\n\n\n

Why South Africa’s middle class is feeling bleak<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The drop in confidence is particularly true for the middle class segment (those earning between R5,000 and R20,000 a month), where confidence has tanked from -7 to -16 on the index.<\/p>\n\n\n\n

This was the only economic segment to see a decline, with the high-income and low-income groups improving (though remaining in the negatives).<\/p>\n\n\n\n

According to the researchers, this is because the middle class feel the shocks of economic strain more acutely, without the social support of the low-income groups or resources of high-income groups to soften the blow.<\/p>\n\n\n\n

FNB Chief Economist Mamello Matikinca-Ngwenya said the uptick in low-income confidence was somewhat surprising, given the sharp increase in food inflation in recent months.<\/p>\n\n\n\n

However, the above-inflation increases in social grants likely helped low-income households (earning less than R5,000 per month) to make ends meet. <\/p>\n\n\n\n

Furthermore, the improved third quarter reading for low-income confidence also compares to a particularly weak second quarter, when more than a hundred people lost their lives in the Eastern Cape floods.<\/p>\n\n\n\n

Looking at high-income earners (earning over R20,000 per month), Matikinca-Ngwenya noted that this segment is riding out the negatives with a larger pool of resources to tap into.<\/p>\n\n\n\n

While two-pot pension fund withdrawals likely faded during the third quarter and higher personal income taxes started to bite, another 25-basis-point interest rate cut would have brought welcome debt service cost relief to more affluent consumers. <\/p>\n\n\n\n

“The strong performance of share prices on the JSE and the appreciation in the exchange rate of the rand may also have underpinned the confidence levels of high-income households,” Matikinca-Ngwenya said.<\/p>\n\n\n\n

By contrast, weak job creation, rising inflation and dwindling two-pot funds likely started to weigh on the confidence levels of the middle class.<\/p>\n\n\n\n

“Increasing inflation, shrinking two-pot retirement payouts and waning consumer confidence will likely translate into a more pronounced slowdown in real household expenditure growth towards the final quarter of the year,” the BER said.<\/p>\n\n\n\n

“In the absence of further interest rate cuts and a bounce-back in job creation, higher food inflation will erode the purchasing power of middle-income consumers in particular.”<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s Consumer Confidence Index recorded another decline for the third quarter of the year, driven by tanking sentiment among the country’s middle class.<\/p>\n","protected":false},"author":10,"featured_media":772373,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[14829,4191,76],"class_list":["post-838301","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-ber","tag-consumer-confidence","tag-fnb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=838301"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838301\/revisions"}],"predecessor-version":[{"id":838312,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838301\/revisions\/838312"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/772373"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=838301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=838301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=838301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}