Due to rising household debt in late 2024 and waning expectations for interest rate reduction in 2025, South African families are experiencing increasing financial distress.
As credit granted to households expanded across most categories, seasonally adjusted nominal household debt rose, according to the South African Reserve Bank’s (SARB) Quarterly Bulletin for the third quarter of 2024.
As a result, household debt increased from 62.1% in the second quarter to 62.2% in the third quarter, a modest increase relative to nominal disposable income.
The overall debt load nevertheless places a significant burden on consumers, even if the cost of debt payment as a percentage of disposable income was constant at 9.1%.
The economic stresses were also reflected in spending patterns. Households spent more on utilities and petroleum goods, while expenditure on necessities like food, drinks, and medical supplies decreased.
These included water, electricity, and fuel for the home.
Due to stringent lending requirements and consistently high borrowing costs, real spending on durable goods fell to a meager 0.2% growth in the third quarter, down from a 1.0% gain in the second quarter.
Spending on furniture, home appliances, and other durable goods slowed, and purchases of computers and personal transportation equipment decreased.
While spending on motorcar tires and accessories continued to decline, albeit at a lesser rate, semi-durable products, such as apparel and footwear, also showed slower spending increases.
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