Inflation putting squeeze on salaries
Disposable income shrinks despite pay increases
INFLATION continues to have a dampening effect on the salaries South Africans take home, leading to a sharp dip in disposable pay last month‚ BankservAfrica’s Disposable Salary Index showed yesterday. On a nominal basis‚ average take-home salaries grew by 3.5% last month compared with the same month last year.
But when taking inflation into account, the actual real disposable salaries fell for a fifth month in a row, by 2.6% on a year-on-year basis.
The average disposable salary was R13 413 last month, while the typical disposable salary was R10 061. Both of these nominal salary levels are lower than four months ago.
BankservAfrica’s head of knowledge and risk services‚ Dr Caroline Belrose‚ said this was the longest period of decline on record for real disposable salaries.
Economists dotcoza chief economist Mike Schussler said domestic consumption was bleak.
“Higher consumer inflation is likely to compound the weak domestic economy with real retail sales declining‚ along with home and car sales,” he said.
The index results show that the average salary has been unable to beat inflation in the past three years.
Real salaries are at levels similar to October 2013.
Consumer inflation is now at 6.4% after rising 0.5% from September, Statistics South Africa said.
It remains outside the Reserve Bank’s target range of 3 to 6% and an interest rate hike would be inevitable next year, economists say.
The BankservAfrica Private Pension Index data‚ which was also published yesterday‚ showed private pension take-home continues to outpace inflation and has grown by 8.4% year on year in real terms.
Belrose said median and average pension for private pensions had beaten inflation for 27 months in a row.
“This means that for the first time on record‚ average pensions have reached a level of 48% compared with average salaries‚” she said.
Private pension payments have exceeded salary increases over the past four years.
The results also showed the number of pensioners receiving less than R10 000 a month had dropped by 8%.
Those getting more than R10 000 rose by 86%.
However‚ the largest percentage of pensioners still remains the below R4 000 a month category.
Meanwhile, producer inflation was unchanged last month, confounding expectations that it would slow further after September’s surprise slowdown.
The producer price index (PPI) increased 6.6% from a year earlier.
Trading Economics had forecast an increase of 6.1% and Bloomberg 6%. Food inflation was the main contributor.
Food producer inflation nonetheless moderated to 11.4% year on year last month from 13.1% for September.
Food has been a main driver of inflation over the past year due to the effects of a severe drought.
The prices consumers pay for food showed an 11.7% year on year increase last month, StatsSA data showed on Wednesday. – TMG Digital