Consumer confidence in South Africa remained depressed in the fourth quarter of 2017, extending its negative streak to three consecutive years, compilers First National Bank and the Bureau for Economic Research said on Wednesday.

Having slumped from -5 in the first quarter of 2017 to -9 during the second quarter, the FNB/BER Consumer Confidence Index (CCI) remained low at -8 index points in the fourth quarter of 2017. No survey was conducted during the third quarter.

FNB and BER noted that the survey was conducted between 28 October and 4 December 2017, before the ruling African National Congress’s conference which elected the country’s generally well regarded deputy president Cyril Ramaphosa to lead the party.

The household financial outlook sub-index of the CCI retreated from +6 in the second quarter to +2 in the fourth quarter of 2017.

"Given the very high food price increases registered in 2016 and 2017, record high unemployment rates and soaring fuel prices during the second half of 2017, it is not surprising that low-income households experienced great financial strain towards the end of 2017," FNB senior economic analyst Jason Muscat said.

The uncertainty about the distribution of social grants to poor South Africans after the Constitutional Court declared the contract of dispersing firm Cash Paymaster Services as invalid, may also have created anxiety among the 17-million beneficiaries during the fourth quarter, FNB and the BER said.

“It is, therefore, not surprising that the majority of low-income consumers expected their household financial position to deteriorate when the CCI survey was conducted during the fourth quarter,” the companies said.

FNB's Muscat said the bleak outlook for government finances remained one of the greatest risks to consumer spending in 2018, with a revenue shortfall of R50-billion projected in the budget and government debt now expected to reach 60 percent of gross domestic product by 2020.

“We expect further substantial increases in personal income taxes and indirect taxes, as well as cuts in government spending in the February 2018 budget," he said.

"This will constrain the spending power of middle and high-income households in particular.”