Economic times are likely to remain challenging in 2017, and South African consumers are very much in for a rough ride in 2017.
If you were one of the many consumers who had difficulty making ends meet in 2016, then unfortunately you might find it much harder in 2017.
With fuel prices that have already increased in January, over indebted South African consumers will be hit hard at the pumps with petrol and diesel going up by 50 cents a litre.
Another thing to look out for is the increase in interest rates by SA Reserve Bank (Sarb) being almost a certainty following the US Federal Reserve’s decision to increase its rates by a quarter percent. Electricity increase is also expected to impact the debt load that consumers will have to carry this year.
According to the FocusEconomics report, with the electricity and water supply constraints that hamper growth by both interrupting production and by discouraging investments, the country’s outlook is a little dim.
Apart from that the BankservAfrica Economic Transaction Index (Beti) report claims that SA is already in a per capita recession because real incomes have been in decline for at least the last three years due to economic growth being slower than population growth.
With so many consumers already struggling to make ends meet in 2016, consumers already plunged themselves deeper into debt during the past holidays by spending money on expensive holidays and generally having a good time – often on credit cards or with money borrowed from money lenders at exorbitant interest rates.
Most consumers start seeking help in with repayments of their outstanding debt in January and February because of additional debts that had been stacked up during the holiday season.
With the interest rate on credit cards being so substantial, it is important for consumers to buy things in cash where possible. With food inflation running at 11% and the Consumer Price Index (CPI) running at 6.6% – well above government parameters – there is not the slightest possibility of relief in sight for consumers.
Most consumers in January are already three month or more behind in their payments and the major culprits are credit and store cards, followed by unsecured debts.