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There is less ho-ho-ho and more no-no-no for spending for consumers this Christmas as a new survey shows that people are cutting their spending and plan to spend much less than they did in previous years.
According to a Debt Rescue survey that investigated the festive spending habits of South Africans this year, consumers will cut back sharply on luxury items such as entertainment (23%), decorations (20%), gifts (22%), travel (19%) and indulgent food and drinks (15%), the very ingredients that traditionally add up to a magical festive season.
The survey provides an in-depth analysis of the current consumer spending patterns, focusing on the festive season’s expenditures in the face of the nation’s economic hardships.
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The survey also showed that a significant majority of participants (71%) prefer using cash, suggesting a cautious approach to avoid accumulating debt, which is particularly relevant in an environment where interest rates are high, making debt more expensive.
The current cost of fuel at R23.25 for 95 unleaded per litre, has also affected 78% of the respondents’ travel plans, while a massive 62% saying they had to cancel plans to travel over the holidays and 33% said they will travel provincially to visit family.
“One of the key purposes of the festive season is to share it with your loved ones. It is heartbreaking that millions of families will no longer be able to afford their annual trip to spend time with their families and close friends this year,” Neil Roets, CEO of Debt Rescue, says.
“With festive season on the doorstep, the survey insights paint a bleak picture, showing a significant shift in consumer spending behaviour as South Africans grapple with the rising costs of living and expensive debt, largely due to a repo rate that closed at its highest level in more than a decade in November 2023.
“The reality is that for millions of families, celebrating the festive season this year simply means ensuring that they have enough to put a nutritional meal on the table to celebrate the special seasonal events like Christmas, Hanukkah and New Year,” Roets says.
Casey Delport, an investment analyst at Anchor Capital shared the same sentiments.
“Although South Africa’s inflation cooled down in November, for the average South African, consumer prices for food and non-alcoholic beverages unfortunately accelerated to 9%, its highest level in four months.”
READ MORE: SA consumers battling to pay their home loans and credit cards
Roets points out that the survey identified a significant trend to spend less this festive season, with 81% of respondents planning to spend less compared to previous years. Only a minority (4%) intends to spend more.
The move to pay cash is particularly relevant in a high repo rate environment where debt becomes more expensive and this behaviour reflects a shift to heightened financial caution that points to the broader economic challenges faced by South Africans, Roets says.
He expects that South Africans will almost certainly lean even more heavily on their credit and store cards to be able to celebrate this Christmas in one way or another.
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