A disturbing survey insight is that people will be prioritising essential expenses over discretionary spending and will be cutting back sharply on luxury items Picture: Ian Landsberg/Independent Newspapers.
With festive season on the doorstep, the latest survey insights by Debt Rescue paint a bleak picture, showing a significant shift in consumer spending behaviour as South Africans grapple with the rising costs of living and expensive debt, largely due to a repo rate that closed at its highest level in more than a decade in November 2023.
The survey, which polled the festive spending habits of over 1000 respondents, predominantly between the ages of 25 and 45, provides an in-depth analysis of the current consumer spending patterns, focusing on the festive season's expenditures in the face of the nation’s economic hardships.
A disturbing survey insight is that people will be prioritising essential expenses over discretionary spending and will be cutting back sharply on luxury items like entertainment (23%), decorations (20%), gifts (22%), travel (19%), and indulgent food and drinks (15%), – the very ingredients that traditionally add up to a magical festive season.
“The reality is that for millions of families, celebrating the festive season this year simply means ensuring that they have enough to put a nutritional meal on the table to celebrate the special seasonal events like Christmas, Hanukkah and New Year,” Neil Roets, CEO of Debt Rescue said.
Casey Delport, an investment analyst at Anchor Capital said, “Although SA’s inflation had cooled down in November, unfortunately for the average South African, consumer prices for food and non-alcoholic beverages accelerated to 9% - its highest level in four months.”
A trend that comes through is the reduction in festive spending, with 81% of survey respondents planning to spend less compared to previous years. Only a minority (4%) intends to spend more. In terms of financing festive expenses, a significant majority (71%) prefer using cash, suggesting a cautious approach to avoid accumulating debt.
“This is particularly relevant in a high repo rate environment where debt becomes more expensive, and this behaviour reflects a shift to heightened financial caution and is indicative of the broader economic challenges faced by South Africans,” Roets added.
The current cost of fuel at R23.25 for 95 unleaded per litre, has impacted the travel plans of 78% of respondents , with a whopping 62% having set aside any plans to travel over the holidays, while 33% will travel provincially to visit family.
Roets said, “One of the key purposes of the festive season is to share it with those you love. It is heartbreaking that millions of families will no longer be able to afford their once-a-year trip to spend time with their families and close friends this year.”
He says that South Africans will almost certainly be leaning even more heavily on their credit and store cards to be able to celebrate in one way or another.
“My advice to those who find themselves in a debt trap is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. When you are in a better position financially, settle your debt sooner by paying more towards your debt and exit the debt review process quicker. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” Roets concludes.
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