Consumers are going to have to brace themselves in the midst of further sharp price increases that erode their quality of life.
Consumers will possibly be pushed to the breaking point in the midst of another possible interest rate increase, high fuel prices and sharp price increases in items such as transport, electricity and food. It appears that medical aid premiums will also rise significantly next year, while ten consecutive interest rate hikes have resulted in consumers paying thousands of rands more on car and house instalments.
Consumers have been struggling for the past few years and it seems the end is not in sight. According to Thys van Zyl, CEO of Everest Wealth, consumers will have to be proactive with their financial affairs as they are pushed ever closer to the brink.
“The interest rate has already been hiked by 4.75 percentage points since November 2021 and another possible increase is on the horizon exactly two years later. Another interest rate hike will result in consumers struggling even more to keep their heads above water and they may no longer be able to afford the instalments on their house, car, credit card or personal loan. The higher interest rate also means that consumers have to put their hands even deeper into their pockets with credit card and store debts that become more expensive.”
The average salary in the country is also not increasing at the same rate and South Africans are getting poorer and poorer. The high cost of living as a result of perpetual price increases forces them to take on more debt and it is a vicious cycle. Payday loans are skyrocketing and consumers are withdrawing investments to keep up with rising living costs.
Consumers who are already straining are also further confronted with the possibility of even higher taxes to finance the state’s failures and projects. “Consumers already have enough concerns, but at the same time there are also noises being made by the government that VAT may possibly be increased to continue funding grants while there is also talk of tax increases to fund the state’s projects such as the National Health Insurance (NHI). “
All this means that consumers are only going to have to work more carefully with their finances as they have less and less money in their wallets but have to shell out more to keep up. “It is more important than ever that consumers should budget properly to make sure they can keep up with the price increases and to see where they can cut back. Every extra cent should be used to pay off debt and to try to save to have an emergency fund in place.
“Consumers should look further where they can potentially save money. This includes, among other things, being smart with taxes and with investments. Consumers need to think long-term as they attempt to weather financial storms. It is important for consumers to adopt behaviours that can help them save. This includes, among other things, making bulk purchases, focusing on promotions, making use of loyalty programs, saving on transport and electricity costs where possible and cutting out luxuries by adjusting their lifestyle.”