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Johannesburg - Anticipating further cost-of-living increases, South Africans are likely to spend less this year on items such as holiday trips, entertainment, dining out, and various luxury goods.
And, after an extended period in which household savings were virtually nonexistent, South Africans now also appear to be realising the value of setting aside part of their income for future use.
These are just a few of the findings of the inaugural MasterCard worldwide index of consumer purchasing priorities.
The index, which will be compiled twice annually, provides valuable insights into consumers' expected saving and discretionary spending patterns over the next twelve months. It is based on face-to-face interviews conducted between October 14 and November 11 2008, with 3 200 consumers from across the Middle East & Africa region.
"South African consumers are bracing themselves for tougher times ahead in 2009," said Jeni Webber, Country Manager, South Africa, MasterCard Worldwide. "More than eight out of every ten South African respondents surveyed are looking at cutting back on discretionary spending in the next 12 months."
When asked whether they thought inflation in their country would be higher, about the same, or lower over the next twelve months, 74% of the South Africans said that they expected it to be higher.
The participants were then asked whether, given their expectations about inflation, they would cut back on their discretionary spending. To this, 81% of the South Africans said yes.
This figure is considerably higher than that reported by the region as a whole or by any of the six other markets included the survey. Although more than two-thirds of the region's consumers likewise expected inflation to be higher, only 47% of them said that they were likely to cut back on their discretionary spending.
As is the case for the overall region, South Africa's male consumers are slightly more likely than their female counterparts to cut back on their discretionary spending.
Interestingly, it is also South Africa's older and younger consumers who are most likely to tighten their purse strings. Of the participants aged fifty-six or older, 84% said they would cutback on their spending, while 83% of the participants aged thirty or younger said they would do so.
Setting some money aside, likewise, appears to be of new-found importance to South Africans. Although South Africans have for years saved virtually nothing of their personal incomes, 77% of the South Africans interviewed in this survey said saving was going to be very important to them.
As to why they feel it's important, most South Africans (55%) indicated that one of their main reasons for saving was to be able to provide for their children's education. 47% cited investments as a reason for saving, and 42% cited retirement.
On average, they expected to save 11% to 20% of their total income.
- I-Net Bridge
