He announcement by the Reserve Bank that it was increasing the repo interest rate by 0.5% coming on top of proposed 8% increases in electricity rates is going to have a devastating impact on consumers.
There is also a strong likelihood the price of SA’s staple food – maize meal – may increase by as much as 50% which means that many South Africans are going to experience hunger.
Neil Roets, CEO of Debt Rescue, said the immediate future looked dismal for all consumers, but especially those with heavy debt loads.
Further repo rate increases will almost immediately translate to price increases for all goods, including food.
“Although… [there was] some rain it was very much a case of too little too late. The planting season is long over and … this failed crop is going to affect the prices of all foods because maize is used as feed for the poultry and beef industry.”
Roets said South Africans were the biggest borrowers in the world, according to a recent World Bank survey, and 10.26 million people have accounts three months in arrears according to the National Credit Regulator (NCR).
Roets said it was imperative to draft a budget and stick to it.
“It is better to save and buy cash and vitally important to live within your means,” Roets said.
Loans should only be used for buying assets like properties and vehicles.
“Distinguish between what you need and what you want – do not try and keep up with the Joneses.
“As soon as you find yourself in a situation where your debt is overwhelming, seek help as soon as possible from a debt counsellor.” –