23 August 2013
SA consumers’ grocery costs increasing at three times the rate of inflation:
According to the latest statistics released on The 21st of August 2013 by The South African Reserve Bank (SARB), the current Consumer Price Index (CPI) for July 2013 amounts to 6.3%, drastically increasing from 5.5% in June 2013.
The July CPI exceeded the prediction of a 5.9% average for 2013, as well as the SARB target range of between 3% and 6%. Breeching the target range for inflation, can be attributed to not only a drastic increase in petrol prices and the weaker rand, but also broader economic pressures. Dating back to exactly one year ago, July 2012, the Consumer Price Index was 4.9%.
Referring to the CPI statistics released for July 2013 again, the transport index increased by 2,5% from June to July 2013, due to an 84c/litre increase in the price of petrol during that period. Over the past year, from July 2012 to July 2013, the annual transport index changed from 4.6% to 8.2%.
Ian Wason, CEO of DebtBusters says “results drawn from the average financials of over 20,000 clients DebtBusters have placed under debt counselling, have depicted some significant trends. Since July 2012, DebtBusters clients’ financials have been aligned with the increase in inflation rates. The spending patterns of clients on essential needs such as food expenses, petrol and travel expenses in relation to their income have drastically increased. With regards to the majority of higher income earning clients, those earning R20,000 and above, there has been a 14.1% increase in food expenses in the last 9 months, Q3 2012 to Q2 2013, trending towards an annualised increase of 18.8% for DebtBusters clients.
Ian Wason goes on to state, “DebtBusters clients are spending more and more money on essentials due to the consistent rising costs of consumer goods and services. When reviewing DebtBusters client’s income, from Q2 2012 to Q2 2013, DebtBusters has also noted a 10.7% increase in statutory deductions, mainly due to garnishee orders and multiple funeral cover deductions from unscrupulous insurers. Consumers are struggling to keep up with their finances, leading them to accruing debt and garnishee orders. The average DebtBusters client are spending 89% of their net monthly income on debt repayments when they seek help from us, after our budgeting process we calculate that they need 70% of their net monthly income to cover their essential living expenses. With the remaining 30% available for debt repayments, we extend loan terms, strip off fees and reduce interest rates to as low as zero per cent to get our clients debt free in 60 months. ”