Nov. 16 (Bloomberg) -- South African consumer confidence was little changed in the fourth quarter, staying close to a two-year low, as the recovery in Africa’s biggest economy weakened.
The FNB/BER consumer confidence index rose to 5 from 4 in the third quarter, First National Bank and the Bureau for Economic Research said in an e-mailed statement today.
Slower economic growth and a weaker rand has undermined spending by households, which makes up two-thirds of expenditure in the economy. Consumers may come under more pressure as inflation accelerates, remaining close to the top of the central bank’s 3 percent to 6 percent target range.
“Consumers are somewhat less exuberant than a year ago,” Cees Bruggemans, chief economist at First National Bank in Johannesburg, said in the report. “The view of economic prospects, though, is jaundiced and mostly getting more so.”
The Reserve Bank, led by Governor Gill Marcus, revised its forecast for inflation last week, predicting the rate will now remain above 6 percent for about a year from this quarter. Inflation quickened to 5.7 percent in September, while the rand has dropped 19 percent against the dollar this year, the worst performer of 16 major currencies tracked by Bloomberg, boosting import costs.
“Accelerating inflation will likely dent the growth in real disposable income over the short term,” FNB said. “This will probably lead to lower growth in consumer spending, given the limited access to bank credit.”
The central bank has kept the benchmark lending rate at a 30-year low of 5.5 percent all year to support the economy, which expanded at the slowest pace in almost two years in the second quarter. The Reserve Bank cut its growth forecast for this year to 3 percent last week.
--Editors: Nasreen Seria, Karl Maier
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