Where South Africans are spending their money

South Africans are spending more of their income on durable goods such as cars, computers and recreational goods than before the pandemic while spending on clothing and furniture has declined. 

This was revealed by the South African Reserve Bank (SARB) in its Quarterly Bulletin for the first quarter of 2024. 

The bulletin revealed that South Africa’s dismal savings rate continues to deteriorate, making the country more reliant on foreign capital for large infrastructure projects and investment. 

It also focused on the reasons for South Africa’s lacklustre economic growth. The economy only grew 0.6% in 2023 and a meagre 0.1% in the fourth quarter of 2023.

As a large part of South Africa’s economy is driven by household spending and consumption, the decreasing disposable income of households hampered growth. 

High inflation and, subsequently, high interest rates have severely reduced the disposable income of South Africans as a greater portion of their paychecks is spent servicing debt. 

Thus, real final consumption expenditure by households increased by 0.2% in the fourth quarter of 2023 following two successive quarterly decreases.  

Real outlays on durable goods and services reverted to increases, while real spending on semi-durable and non-durable goods declined. 

Household consumption expenditure was supported by a marginal increase in households’ real disposable income in the fourth quarter of 2023, even though consumer confidence remained weak. 

The level of real final consumption expenditure by households in 2023 rose by 0.7% compared with that in 2022.

The Reserve Bank also revealed where households are spending their money, with a noticeable trend forming in the aftermath of the Covid-19 pandemic. 

Household spending on durable goods skyrocketed post-pandemic, followed closely by spending on services, while spending on non-durable goods and semi-durable goods has remained flat. 

Within durable goods, the SARB noted spending on passenger cars, computers, and recreational or entertainment goods as drivers of the continued growth in this sector. 

Semi-durable goods such as tyres and vehicle accessories, clothing and footwear, and furniture declined during the first quarter of the year. 

Alarmingly, spending on food and beverages declined. This indicates that South Africans are cutting back on necessities to pay off luxury goods such as cars and computers. 

This shift in spending habits is shown in the graph below. 


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