South Africans are tightening their belts and relying on credit to get by. 💳
According to the consumer credit reporting agency Transunion, in the third quarter of 2023 in South Africa, there were changes in how people borrowed money. More people got credit for clothes, personal expenses, and homes; while fewer got new credit cards and vehicle loans. The retail sector, especially clothing, saw significant growth.
But those with cards used them more, and some struggled to repay on time. As for personal loans, more people applied for and got these, but overall, loan amounts went down due to high-interest rates, and those with lower credit scores borrowed more, possibly out of financial stress.😓
This is to be expected. The price of food has risen in the last few years. According to the Pietermaritzburg Economic Justice and Dignity group (PMBEJD), The average cost of the Household Food Basket in November was R5 314,63. This dropped to R5,238.20 in December. There was a month-on-month decrease of 1.4% but a year-on-year increase of 7.9%. Certain foods experienced notable price increases, with items like oranges seeing a 23% rise. However, there were significant price drops for vegetables like potatoes, onions, tomatoes, and butternut. Additionally, maize meal, rice and oil prices decreased, indicating some stabilisation.
Can South Africans expect relief this year? Kind of, according to Investec, In 2024, South Africa’s economy is projected to grow at 1.0% year-on-year, an improvement from the anticipated 0.5% in 2023. However, the predicted growth still falls short of the anticipated average GDP growth of 5.4% stipulated in the National Development Plan 2030, says Baneng Naape, an Associate Economist at The Competition Tribunal of South Africa. “Locally, economic growth remains constrained by continuous power outages, political instability, weak investor and business confidence, and strict monetary and fiscal policies. Global factors such as geopolitical tensions, climate risk and rising debt also pose a threat to the South African economy.” Naape said.
While the road to recovery may still be challenging, there are positive signs that South Africa may see improvements in the coming year.
Attribution: Photo by energepic.com, Pexels.com
