Consumer confidence in South Africa has now been negative for three years, show the latest numbers released on Wednesday by the Bureau for Economic Research (BER).
South African consumer confidence worsened to -9 in the second quarter of 2017 from -5 in the first quarter, the First National Bank (FNB) sponsored survey found.
"The latest data marks the longest streak where consumer confidence has been at or below zero since the survey started in 1982 -- 12 consecutive quarters," said the report.
The results are derived from questioning 2,500 predominantly urban adults throughout South Africa every quarter.
Jason Muscat, a senior economic analyst at FNB, said: "Despite the recent deceleration in food inflation, food prices remain very high and will continue to dampen the real purchasing power of consumers, especially for low income households. Furthermore, per capita real disposable income is set to deteriorate further on the back of exceedingly poor economic growth, little to no job creation, and substantial increases in personal income taxes for middle and high-income earners.
"In addition, extraordinarily weak business confidence levels -- currently at the lowest level since 2009 -- will keep a firm lid on household credit extension in coming months. Bar a swift, confidence-inspiring change to South Africa's current political landscape, consumer spending is likely to remain depressed during the remainder of 2017."
The weak state of the economy and the related poorer financial performance of many private firms not only limited salary and wage increases, but also led to a reduction– if not the full scrapping – of overtime and bonuses, the report said.
Recession adds to uncertainty
Credit rating downgrades and the South Africa entering its first recession since 2009 have also added to the uncertainty.
South Africa is now officially in its first recession since 2009 after gross domestic product (GDP) shrank by 0.7% in the first quarter of the year, following a 0.3% contraction in the last quarter of 2016.
Consumers worried about their job security and new employment opportunities became even scarcer. In the past, easy credit from retailers and banks has tided households over during such difficult times, but "credit extension has not been as forthcoming this time around" the report continued.
Of all the income groups, low income households with monthly incomes of less than R3,000, which typically include social grant recipients and those relying on intermittent, low-paid jobs, struggled the most.
What this means is that consumers are cutting back on buying goods like cars, furniture, appliances and non-essential and luxury goods which further impacts the economy.
Business also not feeling great
Business confidence in South Africa also plunged to levels last witnessed in 2009 after the global financial crisis, according to the RMB/BER Business Confidence Index (BCI) figures released in June.
The BCI collapsed by 11 points to 29 in the second quarter of 2017 as confidence declined across all of the five sectors of the economy surveyed. The index registered between 32 and 42 points over the last year, suggesting the latest decline "might signal that the current business cycle downswing is becoming even more pronounced", according to the Bureau for Economic Research.