Politics a risk to finances
Political issues are becoming a growing risk to consumer finances, making consumers more vulnerable, according to according to the Momentum-Unisa Consumer Financial Vulnerability Index (CFVI).
Consumer vulnerability is demonstrated by the fact that consumers say their finances affect their relationships and dominate their thoughts, causing them to neglect other important issues. The same old culprits, load shedding and political issues, affect consumer finances negatively.
A total of 85.1% of respondents said their financial problems affect their relationships and 81.2% said they are constantly thinking about their financial problems. However, they are empowered by setting financial goals to make better financial decisions that will reduce their financial vulnerability.
Although the overall state of the South African consumer finances improved slightly in the third quarter of 2022, they remained under pressure. The index increased from 48.9 points in the second quarter to a still sub-par 49.7 points in the third quarter.
The index is produced to provide South Africans with information and strategies on how to accelerate the journey to financial success. The term “consumer financial vulnerability” implies that consumers experience a sense of financial insecurity.
The index provides a window into the psyche of consumers and the extent to which they feel vulnerable about their income, expenditure, savings and debt servicing capabilities.
Increasing food and fuel prices, load shedding and political instability and corruption posed the highest risk to consumer finances according to the key informants who deal with consumers daily.
They expect the risk factors to continue in the fourth quarter, but in a different order. The fastest-climbing risk factor is politicians not focusing on consumer needs.
Although the index mainly moved sideways, it improved on the margin in all four subcomponents, suggesting that households should make a stronger contribution to economic growth in the third quarter.