Hope on the horizon for embattled SA consumers
It’s been a hellish year for consumers. Battered by huge spikes in credit repayments and food prices, South Africans were worn down further by the emotional and financial cost of coping with up to 12 hours of loadshedding a day and, in many parts of the country, dry taps for long spells as well.
So do we have to rely on our famous South African resilience even more next year, or can we expect just a tiny bit of relief?
No doubt the enduring cost of load-shedding for businesses will be felt in retail prices sooner or later, and the knock-on effects of port delays will ultimately be borne by consumers as well. But by all accounts there will be some respite from the series of interest rate hikes that has diminished disposable incomes since November 2021.
An interest rate cut is expected sometime in 2024, albeit most likely towards the end of the year. Food inflation should slow too.
“Predictions of a cut in interest rates accompanied by falling core and food inflation could provide much-needed relief to already highly indebted consumers who have struggled to balance their household budgets during 2023,” said Consumer Goods Council of South Africa CEO Zinhle Tyikwe.
“However, overall we still expect a somewhat challenging year ahead, given that the lag-on effects of high interest rates and price increases of some basic commodities will take time to ease off.”
While South Africa’s annual inflation rate declined from a peak of 7.8% last year to 5.4% in September, food inflation remained high at 8% a crippling burden on the more than half of consumers who spend about 60% of their disposable income on food.
Deloitte’s June 2023 Food Frugality Index found that South Africans had “the highest display of frugality” of the 13 countries surveyed for the index.
One way to save on food costs is to take advantage of the cut-price shelf-stable products sold just before or soon after they have reached their “best before” dates. Such foods which have a long shelf life do not pose a health risk to consumers and may be lawfully sold after their “best before” date, provided the date mark has not been tampered with.
Many of the country’s poorest consumers still firmly believe it’s unsafe to consume “expired” food, but not wasting these items is central to the goal of many South African firms to halve food loss and waste by 2030.
“With more companies adopting this goal, the culture [of buying food after the expiry date has been reached or surpassed] will eventually filter [down] to the consumer level in terms of understanding date markings, which will influence how they store and use products beyond certain dates,” Tyikwe said.
Arguably no South African has a better sense of how the average South African is doing financially than the country’s queen of stockpiling and saving, Ncumisa Ndelu. Based in Umlazi, Durban, she founded the Facebook group “1 Family, 1 Stockpile”, which now has 674,000 members.
“The biggest revelation for me has been
what’s happened with stokvel contributions,” she said.
“Women are contributing more and getting way less. A few years ago, they were contributing R300 to R450 a month and getting a lot more than what they are able to buy now, after contributing R1,000.”
Ndelu said she was getting far more “distressed” private messages from members than in the past, “indicating that more and more consumers are in trouble”.
“Women now know about stockpiling and saving, but I think I need to teach them how to downgrade. It’s important to continue
to live within your means at worst, or beneath your means at best,” she said. “This includes replacing products where necessary with alternatives.”
As for what to expect at the fuel pumps, Automobile Association of South Africa spokesperson Layton Beard began by saying that forecasting fuel prices is impossible.
“Two main factors influence the fuel price locally: the rand/US dollar exchange rate and international oil prices and both are volatile, changing daily,” he said. “The exchange rate is also influenced by local political developments and, with an election next year, this could swing again.”
The good news is that a reduction in petrol, diesel and illuminating paraffin prices in January is very likely.
“But beyond that, it’s anyone’s guess,” Beard said. So the AA advises motorists to budget a little more each month for their fuel and transport costs, if they are able to, and to keep any savings, if the prices are lower than they budgeted for, for those months when they inevitably go up.
On savings, these are Ndelu’s top tips: Know prices so you recognise whether something is a good deal or retail trickery;
Payday is just another day, so don’t do anything [expensive] just because you’ve received your salary;
No saving is too little;
Talk to your children about money and healthy money habits, and include them in your household budgeting process; and
Know your store’s sales cycle and buy then, taking into account that most stores have real sales before paydays.
The Credit Ombud’s office has teamed up with MicroFinance South Africa to offer practical help to consumers whose goal for next year is to break free from their bad debt chains.
It has created a personal financial review checklist to enable people to understand their financial position and what they must do to become debt-free.
You can find it at https://www.mfsa.net/ financial-review-checklist
It’s important to continue to live within your means at worst, or beneath your means at best. This includes replacing products where necessary with alternatives
Ncumisa Ndelu,
SA’s ‘stockpiling queen’