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With the imminent release of 2017’s first quarter consumer confidence figures, it is important to note that much of the current political and subsequent economic uncertainty has not yet reflected in this data. It would serve us well to consider how the second quarter’s figure may be affected as political risks sink in, particularly since this indicator took a dive in the final quarter of 2016.
South Africa’s Consumer Confidence Index (CCI) dropped to -10 in December for the fourth quarter of 2016, from a previous -3, with households citing concerns about the economy. In light of recent political upheaval, the outlook for the economy will almost certainly remain weak, if not deteriorate even further in the eyes of consumers.
Another factor that impacts consumer confidence is the inflation rate. Despite the inflation rate cooling down to 6.3% in February after peaking in December at 6.8%, the recent downgrades by ratings agencies could bode ill for our inflation rate and will likely reflect in decreased consumer confidence going forward.
The latest inflation figures for March are expected tomorrow.
Other important economic announcements due this week:
Tuesday
- US: Building Permits
Wednesday
- US: Oil Inventories
Thursday
- Euro Area: Consumer Confidence Flash
- US: Philly Fed Manufacturing Index and Unemployment Change
Friday
- Euro Area: Purchasing Manager’s Index (PMI)
- Great Britain: Retail Sales
- US: Existing Home Sales
Giacomo Bonavera is head of foreign exchange trading at Capilis Asset Managers. Click here to visit the firm’s website.
