Little money for discretionary spending
SOUTH AFRICAN CONSUMERS are punch drunk. That’s clear from the latest retail sales figures, which fell a very substantial 5,5% year-on-year in real terms in August. The fall follows a decline of 4,6% in July. Statistics SA figures show retail sales in the three months to August were down 3,8% in real terms and down 1,7% in the first eight months of the year. In 2007 as a whole, sales grew by an average of 5,1%. Stanlib economist Kevin Lings says he expects retail sales to decline over 2008 as a whole.
Lings says under current economic conditions there’s no doubt the consumer is under enormous pressure, especially in terms of monthly cash flow. Says Lings: “The basic concern is that since consumers are facing a range of larger than normal price hikes that will impact more fully on non-discretionary spending, the amount of money available for discretionary spending will be substantially curtailed this year and next.”
The larger than normal increases include higher debt servicing costs, food prices, petrol prices, electricity tariffs, rentals, education, healthcare and municipal assessment rates. Together, those comprise around 65% of total consumer spending.