88% of South Africans can’t afford even basic goods, services

A new survey shows that 88% of South Africans are battling to afford even basic goods and services, as a volley of cost-of-living increases keep hitting them from all sides. 72% say that they will not be able to cover their household electricity needs any longer when the proposed new price hikes of 20.5% kick in in April.

According to the latest Debt Rescue survey of over 1 300 people, consumers indicated that they had to cut their budgets for basic goods and services sharply to manage their increased living costs, and 76% say they do not have enough money to cover the latest increases in fuel, electricity, and interest rates, especially since their salaries are not adjusted in line with inflation.

“Consumers are in deep trouble against the backdrop of rising fuel and food prices, as well as a higher interest rate at the same time when unemployment is at an all-time high,” Neil Roets, CEO of Debt Rescue, says.

To make matters even worse, the latest Central Energy Fund data predicts another increase of R1,24 in the price of petrol for 95 octane inland in March, which will be one of the steepest monthly increases on record.

ALSO READ: Food inflation: the culprit is primarily global developments – economist

Can consumers afford food?

It is unacceptable to put people under even more pressure right now, although we understand it is the duty of the Reserve Bank to help curb CPI and high inflation. It is deeply distressing to see the impact of the rising cost of core staple foods on families, he says.

“Core staple foods are the foods that ensure families do not go hungry and form the basis of nutritious meals. Due to the high cost of these essential foods, a lot of nutritious food is removed off family plates.”

The January 2022 Household Affordability Index report from the Pietermaritzburg Economic Justice and Dignity Group shows an increase of nearly 9% in the cost of the basic household food basket. Roets says this means that the average cost of a household food basket is now R4 401,02 while it was R4 275,94 in December 2021.

The price of 15 of the 17 foods considered core foods, which should reasonably be found in most homes, increased.

“The reality is that more and more consumers will be buying these foods with their credit and store cards every month starting a downward spiral.”

He points out that food is the one commodity consumers should always pay for in cash, but when consumers hit the point where they have to buy food on credit, they are in very serious trouble, especially as they are also paying high interest rates for credit.

“It is a debt disaster, but is now often the only option,” cautions Roets.

ALSO READ: SA consumers in unsecured debt trap, no real income increase since 2016

Going into debt for basic goods and services

He also warns that using debt to service living costs and buy basic goods and services is a recipe for disaster.

“No matter how difficult it becomes to balance your monthly budget, using credit is like digging a hole that you can never climb out of.”

If you are already in this debt trap, Roets’ advice is to consider all your options, including consulting a registered debt counsellor who can help.