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Cape Town - Average South African consumers' financial affairs deteriorated to such an extent in the third quarter that they are now practically in a state of collapse.
And, according to a new survey, prospects for a quick recovery do not look good - especially if Eskom's proposed 45% annual hike in electricity tariffs for three years becomes a reality.
The survey showed consumers are being forced to their knees, chiefly because of job losses, heavy indebtedness and increases in the prices of basic necessities.
This is affecting the lower income group particularly harshly.
More than 760 000 workers have lost their jobs since the beginning of the year, while 42.4% of consumers are behind in paying their debts - even those earning an income.
An index developed jointly by the Bureau of Market Research (BMR) at the University of South Africa and the FinMark Trust to measure South African consumers' financial vulnerability, showed that consumers' financial position deteriorated rapidly in the third quarter - 27% year-on-year.
The index has four divisions: income earned, ability to save, ability to handle an increasing expenditure burden, and the ability to repay debt.
Professor Carel van Aardt of the BMR said the biggest deterioration can be attributed to job losses, which were worst among consumers earning more than R30 000 a year and those in the 18 to 39 year age group.
Although the largest number (48%) of financially vulnerable consumers fell in the low-income group (earning less than R30 000 a year), financially vulnerable consumers earning more than R100 000 a year increased by 10% from the second to the third quarter.
Some 34% of consumers in this income group are financially vulnerable. Van Aardt reckoned 21.6% of the 762 000 consumers who lost their jobs this year came from the income group earning more than R100 000 a year.
Most of the financial problems experienced by consumers relate to debt. The survey showed that an increasing number of consumers are more than three months behind in paying off debt and ordinary accounts and are cancelling policies to meet other domestic financial obligations.
- Sake24.com
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