Consumer sentiment survey shows 86% of South Africans worry about rising prices

The latest consumer sentiment survey shows that 86% of South Africans worry about rising prices, putting them in fourth place of most financially anxious consumers in 23 countries surveyed. However, one in four local consumers are optimistic about their long-term financial situation.

According to the Deloitte State of the Consumer Tracker, which measured consumer sentiment in 23 countries in October 2021, shows South Africans’ priorities are shifting and they are placing more emphasis on wellbeing and experiences, while they also have greater intentions to save more for the future.

The local trend follows the global trend of a greater focus on introspection, wellbeing and purpose. Consumers are placing more value on time than ever before and they save for the future to balance their experiences and material possessions.

This trend is in line with consumers’ safety perceptions of returning to work that were measured by considering the number of daily activities perceived as safe. The growth in safety perceptions at work stabilised since June, with South Africa falling within the global average of this metric.

“Consumers are increasingly confident in the safety of various daily activities, although we do not see an increase in their spending priorities,” says Rodger George, Africa Consumer Industry Leader at Deloitte.

“The data also shows us that consumers are becoming increasingly concerned about rising prices and given the context of the new Omicron variant, this puts a grey cloud over South Africans’ pent-up demand, desire to socialise and resume traditional spending habits throughout the festive season.”

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Consumers’ personal household finances

The survey shows a stark contrast in how South Africans feel now compared to their future prospects. They are financially anxious due to current pressures, but most of them are optimistic about their finances on the long-term, far above the global average of 49% and consumer optimism in countries such as China, Mexico, the US and the UK.

South Africans are also still as concerned as they have been since the start of the pandemic about their savings, with 79% noting this. There was also an increase in the number of local consumers who now delayed large purchases they would have made otherwise from 51% to 64%.

Although this sounds as if South Africans, who have a bad reputation when it comes to savings, have become more financially stable, the survey shows that one in three live beyond their means and use credit to stretch their incomes as prices increase.

South Africans also worry about rising prices for common goods at 86%, nearly twenty points above the global average. They are mostly concerned about grocery prices, with 78% believing prices are higher compared to the previous month.

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Spending and shopping trends in South Africa

The general decline in Covid-19 cases made consumers more comfortable to return to social activities such as shopping, going to restaurants, flying or staying in a hotel, with their online buying intentions moving along with the rise and fall in infection numbers.

The survey also showed that share-of-wallet allocation remained steady with South Africans’ discretionary spending intentions at 32% remaining below the global average of 35%, reflecting socio-economic conditions where groceries and housing dominate people’s budgets.

Only 1 in 3 South African consumers plan to buy a vehicle in the next 6 months, with local consumers preferring new vehicles. They are also conscious of the cost of maintenance as cars get older.

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Climate change perceptions

South Africans have a generally widespread belief that climate change is an emergency, with 72% of respondents confirming this, putting the country in the top four most concerned behind India, Mexico and Brazil.

This belief that climate change is an emergency consequently drives sustainable buying consumer-packaged goods, with 55% of consumers confirming they bought a sustainable product or service within the last four weeks. The sustainable products were mostly food and beverages or everyday household goods.

They also noted that buying sustainable goods is usually more expensive, with 45% saying they paid more than they would have paid for an alternative.

“South Africans continue to be inherently optimistic about their long-term future, anticipating signs of improvement. That said, we anticipate that retailers are in for a difficult period over this festive season.

“Retailers should be clear on their value offering and proposition to consumers and focus on customer experience, product assortment and fulfilment across all channels. They should also focus on categories that promote experiences, such as wellbeing, food and celebrations,” George says.