Consumer confidence has plummeted to the lowest level in 2018 after it surged to record highs after Cyril Ramaphosa took over the presidency at the beginning of the year.

The consumer confidence index, compiled by FNB and the Bureau for Economic Research at Stellenbosch University and released on Wednesday, fell from 22 in the second quarter to seven in the third quarter of the year.

Confidence rose to a record high in the first quarter as Ramaphosa’s ascent to the presidency boosted business and investor sentiment and the rand. However, FNB chief economist Mamello Matikinca warned that “Ramaphoria has faded”.

The optimism in the first quarter did not translate into increased consumption in the economy, with retail sales remaining weak for much of the year.

The index looks at consumer attitudes and expectations and is used to evaluate economic trends and prospects. Respondents are asked about the expected performance of the economy, the expected financial position of households and the rating of the appropriateness of the present time to buy durable goods such as furniture, appliances and electronic equipment.

While the survey shows that consumers are glum about the economic outlook and household financial prospects, the outlook for the next 12 months is rosier.

Responses from consumers in the third-quarter survey reflect data from Stats SA that shows SA fell into a recession for the first time since the global financial crisis in the first half of the year, which has put pressure on Ramaphosa to revive the economy.

Weakening confidence levels will put additional pressure on an already struggling economy.

“A confluence of adverse economic developments in all likelihood deflated the confidence levels of consumers in recent months,” Matikinca said.

“A technical recession in the first half of the year, rising unemployment, an increase in VAT and personal income taxes” contributed to the dip in confidence, she said.

She also cited the drop in share prices on the JSE, a weaker rand and soaring fuel prices.

“The readings are less exuberant than in the first half of the year, but still show above-average consumer confidence, while economic growth is, in contrast, particularly weak,” said Investec chief economist Annabel Bishop.

This comes as business confidence dropped to its lowest level since SA plunged into junk status in the second quarter of 2017.

While business is as gloomy as it was when former president Jacob Zuma fired Pravin Gordhan as finance minister, which caused the country’s debt to be cut to subinvestment grade by S&P Global Ratings and Fitch Ratings, consumers are more upbeat than during Zuma’s tenure, when confidence ranged between -3 and -15.