Cape Town - Black Friday marks the official start of the festive season shopping frenzy in South Africa, and consumers would do well to be cautious in their spending habits to ensure that they don’t go into the red.
This year’s festive season period has come at a bad time for consumers.
Interest rates went up last week, which is the worst news for home and vehicle owners.
Inflation is at an all-time high and food prices, especially basic items consumed by the poor, have increased dramatically. The cost of basic municipal services such as water, electricity and refuse removal have become unaffordable, even for the middle class.
According to the Pietermaritzburg economic justice and dignity (PMBEJD) household affordability index, “the average cost of core foods in a household basket (foods which are prioritised and bought first) are still high in relation to ability to pay.
“In September, the cost of these foods was R2 654.46, and over the past year these core foods have increased in price by 16.5% (R375.56).
What is also very disappointing is that the cost of living and salary increases are below inflation.”
The bleak economic situation facing our country means that consumers are poorer than they were three years ago. Therefore, prudent spending should be encouraged, and buying on credit and splurging on luxury items should be avoided at all costs.
Consumers must avoid falling into debt due to the urge to spend money they don’t have during this festive season.
Dr Ntokozo Nzimande, a senior lecturer in the Department of Economics at UCT, warned consumers to exercise restraint and avoid unnecessary expenditure.
“Most importantly, credit/loan finance consumption expenditures should be avoided, especially now that the interest rate is not expected to fall any time soon.”
Instead, consumers should use any extra income earned from stokvels and year-end work bonuses to pay off their debts.
Economists have also cautioned consumers to only buy items they need to avoid plunging themselves and their families into an unnecessary debt trap.
Cape Times