South African salaries have effectively shrunk over the past five years, new data from debt counselor DebtBusters shows.
While nominal incomes have increased by 3% compared to 2016, real incomes become. If a cumulative inflation growth of 24% for the same period is taken into account, shrunk by 21% over a period of five years.
This has left South Africans with less disposable income and increasingly reliant on debt to make ends meet, the group said.
“Unsecured debt for the average customer is 32% higher than in 2016; among top earners it is 49%. This suggests that consumers continue to use unsecured credit to supplement their income. “
The unrest that swept through KwaZulu-Natal and parts of Gauteng in the second week of July was sparked by the arrest of ex-President Jacob Zuma on July 7, the service company PwC said in a report this week.
“However, many political analysts agree that it quickly turned into another socio-political event: Much of the unrest was not sparked by direct political problems, but fueled by the country’s long-term challenges in terms of poverty, inequality and unemployment,” said the group.
The Bureau for Economic Research (BER) attributed the unrest to South Africans’ unfulfilled expectations of their financial well-being.
Based on data collected for its Consumer Confidence Index (CCI), BER said that South Africans have been expecting improvements in their personal finances since the global financial crisis that have not matched their (weaker) expectations of the macroeconomic outlook.
The CCI data show that in the first half of 2021, low- and middle-income recipients expected a significant improvement in their financial situation.
“In essence, South Africans expected the economy to improve given the challenges of unemployment in the country. It has not.”
Add to this the rising cost of food and other essentials that continue to eat up South Africans’ incomes.
According to PwC, South Africa’s average food basket in June 2021 was 7% more than in the same period last year.
Based on data published by Statistics South Africa, the calculations show that the cost of edible oils (e.g. sunflower and rapeseed oil) rose by 16.1% in the first half of the year after the poor harvest of oil crops last year.
Frozen portions of chicken cost 8.7% more through June, while the prices of vegetables like beetroot, carrots, cucumbers, and spinach rose by more than 10% in 2021 due to various factors.
The biggest culprit, however, is mutton / lamb, which increased 36.8% in the six months to June.
Other main culprits are spinach (+ 20%), margarine spread (17.6%) and eggs (17.5%).
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