As incomes shrink people spend less on clothes, alcohol

-3% The percentage personal incomes decreased, according to Nedbank.

Data across Nedbank’s about 1.5-million main-banked clients shows personal incomes were down an average of three percent last year versus 2022 – a sharp turnaround from the 10% jump between 2021 and 2022.

This sample includes its customers who received income or transacted during the July to December period.

However, this stands in contrast with BankservAfrica’s Take-home Pay Index, a measure of salaries across formal employment. That shows an average increase of five percent across those six months.

This data reflects the trend across four million monthly salary payments loaded into the National Payment System.

(It is possible for both these data points to be true as they are measuring slightly different things.)

Nedbank highlights that this income data is an average, with “some clients receiving increases above inflation, some clients below inflation as their employers could not afford higher increases, and some clients that may have lost or seen a reduction in their income”.

With interest rates at the highest level since 2009, it is no surprise that the amount spent on loan repayments across Nedbank’s client base is up.

Home loan payments have increased by nine percent on average in the past year, following a 15% rise between 2021 and 2022.

Repayments on vehicle finance are up five percent (after a six percent rise between 2021 and 2022), and those on personal loans are six percent higher.

The bank notes that “consumer disposable income [is] under pressure”.

Cu ing back on essentials

As interest rates bite, and with a significant increase in the cost of living, South Africans have had to trim spending – even across socalled “essential expenditure”.

The Nedbank data shows people are spending 10% less on fuel and two percent less on groceries than a year ago.

The increase in health care spending is six percent, in line with broader inflation but lower than health-care inflation, meaning utilisation is in decline.

The average spend on education is up four percent from 2022 to last year.

Not disclosed in the Nedbank data is the average spend on insurance, which could be classified as essential expenditure.

From Statistics SA consumer price inflation data, we can see insurance inflation increased in February, after tracking in line with inflation (roughly five percent) for some time.

In February, insurance inflation was 9.5% as premium increases were enforced.

Extreme weather impacts last year, especially the Gauteng hailstorm last November, have meant steep increases in premiums across the board.

The cuts in spending have, obviously, not only been on essential expenditure.

Non-essentials

Nedbank’s data shows declines in spend across three of four main categories.

Home improvement expenditure in the second half of last year was nine percent lower than the same period in 2022, while spend on clothing is down by three percent, and one percent lower on alcohol.

One can see the impacts of the drop in spend on home improvement and clothing among the listed retailers, where sales growth has been tepid (in some instances there have even been declines).

Factor in price movement, exacerbated by the ports crisis, and volumes are down across most players.

The only category where spending is up is fast food, with a three percent increase.

Famous Brands – which, given its scale, is a useful proxy for the sector – reported a weighted retail sales price increase of 3.8% in July and August.