Consumer sentiment rebounds to highest level of 2025, signalling stronger festive spending

South African consumer confidence improved notably in the fourth quarter of 2025, offering a welcome boost to retailers ahead of the festive season.

The latest FNB/Bureau for Economic Research (BER) Consumer Confidence Index (CCI), released on Tuesday, shows the index rising from -13 in the third quarter to -9, marking the strongest reading of the year.

Although still below the long-term average of -1 and slightly lower than the 2024 festive-season level of -6, the CCI report says the latest uptick is meaningful.

It follows robust retail activity earlier in the year, with sales volumes growing by an average 3.9% year-on-year during the first three quarters of 2025.

The BER noted that the improvement suggests consumers’ willingness to spend has extended into the holiday period.

The biggest driver of the recovery was the sub-index measuring whether it is an appropriate time to buy durable goods, such as vehicles, furniture and electronics, which climbed from -20 to -14, its best performance since the second quarter of 2019.

Lower interest rates, a stronger rand and declining import prices have made big-ticket items more affordable.

The CCI report adds that the SA Reserve Bank’s (Sarb) latest 25 basis point rate cut on 20 November, announced at the end of the survey period, could lift the time-to-buy-durables index further in the coming quarter.

All three CCI sub-indices improved in the fourth quarter, with the durable goods buying sentiment up from -20 to -14, the economic outlook rising from -22 to -19, and household finances inching up from 3 to 5 index points. 

However, confidence levels diverged across income groups. Middle-income households (earning R5 000–R20 000 per month) saw the strongest rebound, jumping from -16 to -8 after a steep decline in the previous quarter.

Low-income households edged slightly higher from -9 to -8. In contrast, high-income households (earning more than R20 000 per month) saw a small deterioration, from -11 to -12.

FNB chief economist Mamello Matikinca-Ngwenya said the improvement reflects a modest increase in consumers’ willingness to spend, especially among middle-income South Africans.

“These developments suggest that retail tills will jingle a merry tune during the 2025 festive season, with sales volumes projected to exceed the already jolly numbers recorded during the 2024 holiday period,” she said. 

Investec economist Lara Hodes described the rebound as “a favourable outcome,” even though overall sentiment remains in negative territory. She highlighted the strong recovery in the durable goods sub-index, now at its highest level since mid-2019.

Hodes added that consumers have benefited from a softer inflation environment and a cumulative 150 basis points in repo rate cuts since the start of the Sarb’s easing cycle.

Unisa economist Dr Eliphas Ndou said that this small uptick in the consumer sentiment index is good news, which signals a modest increase in consumers' willingness to spend more.

“The slight weakening in consumer sentiment among high-income groups indicates a less willingness to spend in this income group,” Ndou said.

“The economy needs the high-income group to spend more, as they have a high marginal propensity to consume, to significantly raise the contribution of household consumption to overall economic growth.”

BUSINESS REPORT