Consumer confidence in South Africa improved slightly in the first quarter of 2026, driven by stronger sentiment among higher-income households, but risks linked to the Middle East conflict could reverse those gains in the months ahead, a survey showed on Tuesday.
The consumer confidence index, compiled by the Bureau for Economic Research and sponsored by First National Bank (FNB), rose to minus seven points in the first quarter from minus nine in the previous quarter.
Despite remaining in negative territory, the uptick signals a modest improvement in household sentiment in Africa’s most industrialised economy.
Economists attributed the rebound largely to improved conditions for wealthier households, supported by lower borrowing costs, a stronger currency and buoyant equity markets earlier in the year.
However, the outlook remains fragile.
“Ripple effects from the Iranian war may well see a U-turn in high- and middle-income confidence during the second quarter,” FNB Chief Economist Mamello Matikinca-Ngwenya said, warning that geopolitical tensions could quickly erode gains.
The survey was conducted before the outbreak of the latest Middle East conflict in late February, meaning the full impact of rising oil prices and global market volatility has yet to be captured.
Analysts say escalating tensions in the region could feed into higher fuel costs, inflationary pressures and tighter financial conditions — all of which tend to weigh on consumer spending.
South Africa, which imports a significant share of its fuel needs, is particularly vulnerable to oil price shocks triggered by geopolitical instability.
The data comes as the South African Reserve Bank prepares to announce its latest interest rate decision later this week, with policymakers balancing signs of improving domestic conditions against mounting external risks.
A weaker rand, declining stock market performance in recent weeks and rising global oil prices are expected to feature prominently in the bank’s deliberations.
While higher-income households showed renewed optimism, the survey highlighted a widening divergence across income groups.
Confidence among low-income households deteriorated further in the first quarter, reflecting ongoing economic strain at the lower end of the income spectrum.
The decline was attributed to sluggish job creation towards the end of 2025 and stricter compliance measures in the country’s social grant system, which have affected access to welfare support for some beneficiaries.
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This divergence underscores persistent structural challenges in South Africa’s economy, including high unemployment and inequality, which continue to dampen broad-based consumer sentiment.
Economists note that while easing interest rates and earlier gains in financial markets provided some relief to middle- and upper-income households, these benefits have not filtered through evenly across the population.
Looking ahead, the trajectory of consumer confidence will depend heavily on both domestic policy decisions and global developments.
Any sustained increase in fuel prices or further currency weakness could push up inflation, potentially limiting the central bank’s room to support growth through monetary easing.
At the same time, continued weakness in employment growth could further strain household finances, particularly among lower-income groups.
Although the first-quarter data points to tentative stabilisation, analysts caution that South Africa’s recovery remains uneven and vulnerable to external shocks.
The survey suggests that without a sustained improvement in job creation and a stable global environment, recent gains in consumer confidence could prove short-lived.
