KASI consumer-sentiment index rose by 7 points in June from -18 to -11. The consumer expectations index and current economic conditions index increased by 8 and 6 points respectively.
General economic conditions in the country and city experienced the largest gains in June growing by 15 and 10 points respectively. Purchasing power and job prospects also improved this month gaining 7 and 8 points respectively. Household spending, personal finance, and income change also recovered in June.
Amongst the seven countries that make up the index, consumer confidence in Ghana fell the most dropping 14 points from -13 to -27 while consumer confidence in Tanzania’s rebounded 51 points from its all-time low of -37 in May to 14 this month.
ICS data from 2016 to 2020
The global consumer confidence index increased by 7 points in June rising to -11 from -18. Both sub-indices on future expectations and the current economic conditions rose in June. While both sub-index remained firmly in the negative territories, the future expectations index grew by 8 points from -10 to -2 whereas the current economic conditions climbed 6 points from -40 to -34.
With governments lifting lockdowns and easing restrictions, there is a sense of returning to normalcy and this is spurring optimism amongst consumers on the current state of their respective economies as well as the future. This improvement in consumer sentiment comes on the back of rising COVID-19 cases in Africa.
As of 20th July, the number of coronavirus cases in the continent stood at 721,563 while the number of deaths was at 15,169. Consumers continue to be concerned about the virus as illustrated by the KASI Covid-19 fear index where 67% of respondents were very concerned with the spread of COVID-19.
COVID-19 economic stimulus and easing of restrictions in several countries help boost consumer confidence in June
In June, consumers felt that the general economic conditions in both their country and city improved. The index tracking general economic conditions in the country rose from -15 to 0, while the index for economic conditions in the city grew to -1 from -11. Job prospects improved by 13 percentage points this month with several economies opening up (South Africa, Kenya notably). A low-inflation environment and cash transfer programs to assist vulnerable households caused consumer purchasing power to expand by 7 points in June after stagnating in May. Furthermore, the cash-transfer and loan-restructuring programs, coupled with a low-inflation environment and easing of restrictions thus allowing people to return to work, led to gains in household spending, household income, and personal financial situation. These sub-indices grew by 5, 4, and 3 percentage points respectively.
Rising COVID-19 cases dampened consumer's confidence in Ghana while economic stimulus boost consumer confidence in Tanzania
When it comes to consumer confidence in the seven countries we track, consumers' confidence in Ghana dropped the most (-14 points) as consumers are seeing the economic prospects looking bleak. The sub-index tracking consumer expectations dropped by 18 points. This reversal comes after 2 months of successive growth in the consumer sentiment index as the number of cases in Ghana increased significantly over the past 2 months. Ghana is now 3rd (32,427 as of July 27th) in terms of the number of confirmed cases in Africa behind Nigeria and South Africa.
On the other side of the spectrum, consumer confidence in Tanzania rebounded by 51 points rising to 14 from its all-time low of -37 experienced in May. Both the consumer-expectations index and current-economic conditions index recovered by 52 and 50 points respectively. The National Bureau of Statistics of Tanzania (NBS) reveals that the Annual Headline Inflation Rate for the month of June 2020 stagnated at 3.2% as it was recorded in May 2020. In June, The IMF approved a USD 14.3 Million debt relief to Tanzania to help address Covid-19 Impact. In a statement, Mr. Tao Zhang, Deputy Managing Director and Chair of the IMF said: “The COVID-19 pandemic is having an adverse economic impact on Tanzania, creating exceptional fiscal and balance of payment needs. The authorities have implemented containment measures and avoided economic lockdown.
Consumer-facing companies and retailers should expect a choppy demand and a challenging environment in the short to medium term
COVID-19 is definitely having an impact on consumer confidence and we have seen significant volatility month over month and wide variation amongst the countries that we track. For retailers and consumer-facing companies, it means that consumer demand and sales are going to be difficult to predict and previous years' data won't cut it. The impact of COVID-19 on people's daily lives and shopping habits is so severe that it is critical to get a pulse on the consumer and markets every month. Our COVID-19 Pulse data shows major shifts in category demand pre and post COVID-19 as well as during the pandemic.
"As governments continue to ease restrictions and open up economies, people are returning to work and the economic activity is picking up which is boosting consumer confidence. With Africa going through its peak, this optimism may be short-lived if governments are forced to re-activate restrictions to contain the spread of the virus" said Davies Nyachienga, Economic Intelligence Group at KASI.
About the methodology
KASI Consumer Confidence Score (KASI CCI) is a composite index compiled from a seven-question survey that runs monthly via our consumer polls in the countries covered. The data output is based on a fresh, randomly selected representative sample of city dwellers aged 18-64. Released the first week of every month, KASI CCI provides a focused view on consumer perceptions in seven African urban centers (Ghana, Nigeria, Kenya, South Africa, Cameroon, Ivory Coast, Tanzania) where most spending in the continent is concentrated.
For each question, the final metric will be a ‘balance measure’ of the percentage of positive responses minus the percentage of negative responses. The overall metric will be an average across all the questions.
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