Johannesburg - The incomes of South African citizens have risen substantially since 1994, an Investec Group economist said on Thursday.
"South Africans have become more affluent (on average)... Income per capita has risen in real terms, to R38 734 per annum from R27 866 in 1994," said Annabel Bishop in a statement.
"This has pulled household consumption expenditure to R1.2 trillion a year, as more South Africans are included in the formal economic net."
The estimated income per person in South Africa has risen more than four times (including inflation) to R57 234 per year, from R12 281 in 1993.
She said the uninterrupted rise in living standards was also driven by welfare payments and the provision of social services ranging from housing and electricity to water, sanitation, healthcare and education.
The rise in incomes was also aided by counter-cyclical government spending (job creation and "real" salary increases).
Bishop found that household debt as a percentage of disposable income was also rising.
"The short-term debt-servicing capacity of the private sector should continue to be enhanced by the relatively low interest burden for those who are not over indebted."
She said the SA Reserve Bank was unlikely to hike interest rates this year.
High unemployment rates, low savings and high debt levels continued to impact negatively on the household sector.
She expected household consumption expenditure (HCE) growth to remain moderate this year at 3.3 percent year-on-year.
South Africa was likely to experience economic growth of only 2.5% (or less) year-on-year this year due to a weak global demand and production disruptions.
High price increases will limit consumer spend.
She said the Consumer Price Index (CPI) inflation in South Africa was rising and the "reweighting" of the CPI will add to it.
"In particular, food and fuel prices are rising rapidly which is placing strain on households, and individuals are now dipping deeper into debt..." said Bishop.
"Consumer spending is being supported by both real increases in disposable incomes and rising unsecured credit, with economic growth in turn being driven by consumer spending."
She said the current rapid pace of unsecured credit, 49.3% year-on-year, was not sustainable.
"Indeed, it brings the total amount of unsecured credit in SA utilised by consumers to R131bn in June this year..."
Banks and government have, however, agreed on a range of measures to curb reckless lending and growth in unsecured borrowing by reviewing the way lending is done to prevent over-indebtedness of households.
This gradual approach to limiting the growth in unsecured lending should help prevent the formation of a credit bubble, and also prevent the negative impact on HCE growth.