South Africans under pressure – almost half cannot afford necessities

[Nat Quinn]

South Africans under pressure – almost half cannot afford necessities

The rising cost of living is significantly impacting South African households’ wallets. Consumers struggle to afford basic necessities, and the majority do not have a retirement plan.

This was revealed in FinMark Trust’s annual FinScope Consumer South Africa for 2023.

The survey found that food costs consume approximately one-third of South African residents’ income, and rising costs weigh heavily on consumers’ budgets.

Living expenses, which include groceries, energy, transportation and communication, account for around 85% of monthly income.

Specifically, groceries account for 30.4% of expenses, energy for 11.5%, transportation for 9.1%, communication for 8.8%, and routine household maintenance, rental, and rates for 8.5%.

“These rising costs affect not only the ability to invest in education and insurance but also contribute to the inability to repay debt,” the survey found.

According to the National Credit Regulator’s Credit Bureau Monitor for March 2023, 23% of consumers missed instalment payments.

“It is considered highly burdensome to allocate more than 10% of income to household energy expenses, including electricity,” said FinMark Trust senior data and analytics specialist Jabulani Khumalo.

“The year 2024 may not alleviate the cost to consumers, as they have recently endured a staggering 12.74% increase in Eskom’s tariffs, with no indication of interest rates decreasing anytime soon.”

“Due to financial constraints, two out of every five individuals reported their homes being without electricity in 2023.”

The survey said the rising cost of living profoundly impacts people’s wallets, affecting their financial stability and overall well-being in several ways.

Since a large portion of their income is allocated to cover necessities, people have less money available for savings, investments and leisure activities.

This makes it increasingly difficult for them to make long-term plans and achieve their financial goals, like saving for retirement.

According to the FinScope results, 30 million economically active adults in South Africa, or six out of seven (86%), do not have a retirement plan.

In addition, about two-thirds of middle-class individuals, earning between R9,999 and R20,000, do not have retirement financial products.

 

SOURCE:South Africans under pressure – almost half cannot afford necessities – Daily Investor

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