South Africa's consumer confidence improved in the fourth quarter to hit its highest reading for 2025, helped by consumers’ appetite to spend into the holiday season, a survey showed on Tuesday.

The consumer confidence index, sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, improved to -9 points from -13 points in the third quarter.

All three sub indices of the index — the economic outlook, household financial outlook and the suitability of the present time to buy durable goods — improved in the final quarter.

"These developments suggest that retail tills will jingle a merry tune during the 2025 festive season, with sales volumes projected to exceed the already jolly numbers recorded during the 2024 holiday period,” said FNB Chief Economist Mamello Matikinca Ngwenya.  

The survey found that while retail sales growth is still expected to slow year-on-year, the rise in the index, together with employment gains and another interest rate cut, suggests the moderation could be less pronounced than previously expected.

Ngwenya said consumer sentiment toward the end of the year was likely buoyed by a number of other positive developments, apart from a further interest rate cut and an appreciation in the rand exchange rate.

The positive developments include a 47-cent per-liter decrease in petrol prices between August and November, food inflation slowing to 3.9% in October from 5.5% in July, and employment rising by 248 000 in the third quarter, according to Matikinca.  

South Africa in November secured its first credit rating upgrade in nearly 20 years with the S&P Global raising the country’s foreign-currency long-term sovereign rating to "BB" from "BB-". The credit rating agency also said South Africa's GDP growth will pick up to 1.1% in 2025 after a subdued 0.5% in 2024.