Johannesburg - Consumers have been bruised by job losses, price increases and
HIV/Aids, Finmark Forum said on Thursday as it released its
Consumer Financial Vulnerability Index (CFVI).
Those in the R30 000 to R100 000 a year income bracket were
financially most vulnerable, the survey found.
"Although the rate of job losses declined towards the end of
2009 and in the first quarter of 2010, the number of people losing
jobs is putting more consumers at risk," Finmark Forum said.
Consumers were at risk as the prices of some goods and services,
such as food, housing and utilities, medical services, transport
and education, grew faster than household incomes during 2009.
"Other indications of continued financial stress are the
increasing number of consumers making arrangements to pay off their
debt over a longer period or cancelling policies to cover household
expenditures."
Overall the financial vulnerability of consumers lessened
somewhat during the first quarter of 2010.
"The results indicate that consumer financial vulnerability,
after first increasing in the third quarter of 2009, has now
declined for two consecutive quarters as the economy picked up
momentum and consumers adapted their lifestyles downwards."
However, the survey found that no significant decline in
vulnerability was expected in the near future as the underlying
causes remained mainly unaddressed.
"These include high levels of unemployment and poverty, low
skills levels, low labour market absorption rates, high levels of
indebtedness and defaults on repayments, ineffective service
delivery, and the impact of HIV and Aids."
The CFVI was developed by the Bureau of Market Research in
collaboration with FinMark Trust.
The overall CFVI and sub-indices are based on a 10 point scale
where 0 indicates total financial security and 10 indicates total
financial vulnerability.
Although the CFVI score had improved from a high of 5.48 in the
third quarter of 2009 to 4.66 in the first quarter of this year, it
was evident that South Africans remained at risk.
The survey found that savings vulnerability increased from the
second quarter to the third quarter of 2009 but declined from the
third quarter of 2009 to the first quarter of 2010.
"This could be explained by consumers hard hit by the recession
having adapted their lifestyles downwards and becoming better able
to cope with existing savings at their disposal."
Consumers also entered into fewer credit agreements, enabling
them to save more.
Adapt lifestyles
The survey found that expenditure vulnerability, which depended
on various factors including whether consumers were able to deal
with rising costs such as food and transport or were able to live
within their means, showed a continuing decline from the second
quarter through to the fourth quarter of 2009, followed by a slight
increase during the first quarter of 2010.
Debt servicing vulnerability and income vulnerability rates
increased from the second to the third quarter of 2009 but declined
from the third quarter of 2009 to the first quarter of 2010.
According to the survey, lower income vulnerability, which
related to job and income security, could be attributed to a
decline in the rate of job losses towards the end of 2009 and in
the first quarter of 2010.
Lower levels of debt servicing vulnerability could be the result
of both lower interest rates and lower credit-acquisition rates
among consumers.
The overall consumer financial vulnerability index increased
from the second to the third quarter of 2009, driven by a large
number of job losses, negative economic growth and high levels of
defaults on debt servicing.
In contrast, consumer financial vulnerability improved slightly
from the third quarter of 2009 to the first quarter of 2010 as the
economy picked up momentum, the rate of job losses decreased, and
as consumers continued to adapt their lifestyles downwards, Finmark
Forum said.
- Sapa