South Africa has recorded its strongest improvement in consumer confidence for 2025, with the country’s middle-income earners, specifically those receiving between R5,000 and R20,000 a month, playing the most significant role in driving this positive shift. This group forms a large portion of active retail consumers, which means their behaviour often influences national spending trends. The latest FNB and Bureau for Economic Research Consumer Confidence Index for the fourth quarter shows that overall sentiment among households has strengthened noticeably, even though it remains in the negative range.
Key Takeaways
- Middle-income households drive the rebound: Confidence among South Africans earning between R5,000 and R20,000 per month showed the strongest improvement, signalling a significant rise in willingness to spend.
- Durable goods sentiment hits multi-year high: The sub-index for purchasing durable goods improved to its best level since 2019, supported by lower interest rates and a stronger rand.
- Economic conditions strengthen overall sentiment: Declining petrol prices, easing food inflation, job gains and South Africa’s improved global financial standing all contributed to a more optimistic consumer outlook.
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Consumer Confidence Reaches Highest Level of 2025
The index indicates that consumer confidence improved to minus nine points in the final quarter of the year, a figure that still reflects underlying caution but nonetheless marks the best reading of 2025. Although the level falls short of the minus six recorded in the same quarter of 2024 and remains below the long-term average of minus one, the outcome is still noteworthy given the challenging economic climate that has shaped much of the year.
The Bureau for Economic Research explained that the improvement is an encouraging indicator for the broader economy as well as for the retail and business sectors. Rising confidence among households typically reflects a greater willingness to shop, invest in goods and engage in discretionary spending, which in turn supports stronger performance for companies that depend on consumer-driven revenue. Consumer confidence is often viewed as a leading indicator of short-term economic direction because households tend to adjust spending behaviour more quickly than businesses adjust investment plans.
Retail activity has already shown signs of resilience, with the growth rate in sales volumes averaging 3.9 percent year on year across the first three quarters of 2025. The Bureau noted that the latest confidence figures suggest that consumers continued to show enthusiasm for spending as the holiday season approached, which may offer retailers a stronger finish to the year than many previously expected.
Strength in Durable Goods Sentiment
One of the most prominent improvements within the Consumer Confidence Index has been the sub-index focused on the suitability of the current period to purchase durable goods. Items such as new vehicles, furniture, large household appliances and electronic products fall within this category. The reading for this component rose from minus twenty to minus fourteen points, reaching its most positive position since the second quarter of 2019. Durable goods purchases are closely linked to changes in interest rates because many consumers finance them through store credit or bank loans.
This shift has been supported by several macroeconomic developments. Interest rates have eased further and the rand has shown greater strength against major currencies, which helps reduce the cost of imported products and makes big-ticket purchases more affordable. The latest 25 basis point interest rate reduction announced by the South African Reserve Bank on 20 November occurred late in the survey period, which means that the positive effect of this adjustment may continue to filter into consumer expectations in the months ahead.
The broader economic outlook sub-index also displayed an improvement, rising from minus twenty two to minus nineteen points. Similarly, households reported slightly better views of their personal financial positions, with the relevant sub-index increasing from three to five points. Household finance sentiment often improves ahead of major shopping seasons, particularly when inflation pressures ease.
Middle Class Sees a Big Turn
When consumer confidence is broken down by income level, two of the three categories reported improvements in sentiment, with the most striking recovery observed among the middle class. Households earning between R5,000 and R20,000 per month saw their confidence level rise sharply from minus sixteen to minus eight. This follows a considerable decline in the previous quarter, where the index fell from minus seven to minus sixteen, which indicates that the group has experienced a rapid rebound in sentiment heading into the final part of the year.
Middle-income households typically drive demand in clothing, food retail, furniture and entry-level automotive markets, which makes their confidence levels particularly important for forecasting retail activity.
Confidence Among Low- and High-Income Groups
Low-income households, defined as those earning less than R5,000 per month, recorded a marginal improvement. Their confidence level shifted from minus nine to minus eight points. Although this change is modest, it still reflects a slightly more upbeat perspective than earlier in the year.
In contrast, high-income earners with monthly incomes above R20,000 registered a slight downturn in sentiment. Their confidence score slipped from minus eleven to minus twelve in the fourth quarter of 2025. High-income earners are often more affected by investment market shifts and global financial conditions, which may explain diverging attitudes compared with lower and middle-income groups.
Factors Supporting Strengthened Consumer Sentiment
FNB Chief Economist Mamello Matikinca Ngwenya attributed the improved mood among consumers to a broad combination of favourable economic changes. In addition to lower interest rates and a stronger rand, households benefited from a 47 cent per litre decrease in the petrol price between August and November. Food inflation also moved lower, falling from 5.5 percent in July to 3.9 percent by October, which provided additional relief for households managing day to day expenses.
Lower petrol and food prices tend to support sentiment quickly because these expenses make up a large share of monthly household budgets.
Employment conditions also played a key role. Roughly 248,000 additional jobs were recorded in the third quarter, offering greater income stability and encouraging confidence among both workers and job seekers. South Africa also experienced a notable improvement in its international standing, with Standard and Poor’s providing the country with its first sovereign credit rating upgrade in two decades and the nation being removed from the Financial Action Task Force grey list. Being taken off the grey list reduces scrutiny for financial institutions and may open the door for increased foreign investment flows.
Improved Willingness to Spend
The Bureau for Economic Research stated that the improvement in consumer sentiment points to a slightly stronger readiness to spend, particularly among middle-income households, compared with the third quarter of 2025. Although retail sales growth is still expected to slow when measured year on year, partly due to the unusually high base created in late 2024 when two-pot retirement withdrawals began, the latest data suggests that the slowdown might be less severe than initially anticipated. The combination of healthier confidence levels, reduced borrowing costs and better employment numbers has helped ease financial pressure and encourage a more positive consumer outlook.
Conclusion
The latest data reflects a noticeable strengthening in consumer sentiment across South Africa, particularly among middle-income households whose spending power plays a crucial role in supporting the wider economy. Although confidence levels remain in negative territory, the improvements recorded in the fourth quarter suggest that households are feeling more secure about their financial prospects heading into the new year. Lower interest rates, favourable price movements and rising employment have all contributed to a more positive environment for both consumers and retailers. While challenges remain, the upward trend indicates that the momentum of the final months of 2025 may carry forward, offering a more stable foundation for economic activity in the months ahead.
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