BUSINESS NEWS – The expected price increase in the price of petrol by around 80 cents a litre as well as a substantial increase in the cost of electricity is going to hit the consumer like a ton of bricks.
Independent economist Dawie Roodt said the fuel price increase was largely due to the weakening rand and the increase in the cost of crude oil.
Investec chief economist Annabel Bishop said an expected petrol price increase in March would end the inflation descent and higher food price inflation was now a risk as a result of drought conditions.
Credit solutions firm MBD’s consumer financial vulnerability index showed that the finances of South African consumers are under pressure from too much debt and spending more than they earn.
The index research, conducted by the Bureau of Market Research (BMR) and the department of taxation at Unisa on behalf of MBD, showed that the benefits of lower fuel prices, which have helped boost disposable incomes and finances, were not being felt by all consumers. It showed that public transport costs increased by 7.4% in the fourth quarter of last year.
It also confirmed that consumers’ debt-servicing capabilities remained their biggest concern and cause for financial vulnerability in the fourth quarter of last year.
BMR economist Jacolize Meiring said the pressure on consumer finances was intensified by prolonged labour strikes, some substantial price increases and slow employment growth that negatively influenced income levels.
Neil Roets CEO of Debt Rescue, one of the largest debt management companies in South Africa, said the present combination of economic factors had all the makings of a perfect storm.
“The total debt that consumers stacked up during the past several years effectively means that indebted consumers owe 75% of their net earnings to creditors.” Roets said.
“Once they have serviced their mostly overdue debt, very little money is left for essentials like food, clothing, transport and school fees.”
Roets said retailers had not passed on the savings accrued through reduced fuel prices which resulted in cheaper transportation and operating costs.
“About the only thing we can say about food prices is that there has been a slowdown in price increases. In a snap survey of supermarkets in the greater Gauteng area, we found only a handful of products that had decreased by a few cents – not anywhere near the drop we would have expected.”
“The fact remains that the overall economic outlook remains grim as millions of consumers are unable to service their debt resulting in ever greater numbers having to seek help from debt counsellors.
“Debt Rescue has been experiencing unprecedented growth largely because of the flood of consumers who are on the verge of losing their possessions to debt collectors and resort to debt review to help them repay their debt in a manageable way,” Roets said.
According to the National Credit Regulator’s Consumer Credit Market Report (CCMR), the total outstanding gross debtor’s book is sitting at R1.47 trillion. This represents money owed by consumers in the form of mortgages, vehicle finance, credit cards, store cards, personal loans, short term loans, pension and insurance-backed loans.
For more information, please contact Neil Roets on his cell: 083 644 7406 or e-mail email@example.com URL: www.debtrescue.co.za
Source : Sapa