Data released by the National Credit Regulator (NCR) reveals that more than half of all credit active consumers are at least three months or more in arrears, with South Africans owing over R1,3 trillion in outstanding debt.
Adding to this, consumers have also been hit with an economy that is technical recession, a Vat increase and a petrol price that has skyrocketed 23% from September last year, creating a knock-on effect on the cost of just about everything.
As a result, Debt Rescue CEO Neil Roets says there’s been significant growth in the number of people seeking debt counseling.
“Many consumers have already cut their budget significantly, but they still struggle to keep their heads above water,” he was quoted saying in a Business Tech report.
Contrary to popular belief, all income groups are feeling the pinch, including the upper echelons, but clearly, the middle- and working class are the most affected.
“Consumers have very little space for adjustments in their budgets, as they are having to already count every rand they spend, and the negative impact on living expenses leaves them with very few options of making it from one paycheque to the next.”
In a bid to keep up with rising costs, consumers are making major cuts to their monthly budgets.
According to Nielsen’s latest Consumer Confidence Survey, the first place consumers are cutting back on is their entertainment expenditure, with 65% of survey respondents refraining from getting takeaways.
Many consumers are also making do with the clothes they already own, with 59% of respondents saying they had cut new clothing out of their budget.
More consumers are also switching supermarkets to save and around 55% of consumers are finding cheaper alternatives to their beloved grocery brands. SA retailers have all reported an increase in house brand or private label purchases.
Roets says consumers will also look at items that run as debit orders to figure out what they can reduce. Typically, these include things like cellphone and gym contracts.
“From there they would most likely look at revising various insurances to make their cover more affordable,” he says.