This is the average take-home pay in South Africa right now

Take-home pay reached its highest peak in 10 months in June and beat inflation for the third time, according to the monthly BankservAfrica Take-home Pay Index.

The real seasonally adjusted take-home pay as at the end of June is R13,890.

A major contributing factor to this increase was the 2019 national elections in May where there were an estimated 235,000 temporary salary payments made to contracted workers.

This is based on preliminary information sourced from the IEC. Although the exact number will only emerge when the IEC’s Election Report for 2019 is released, the real number is likely to be close to this especially because of the increase in the number of polling stations.

Percentage change in total take-home pay and pension payments made over an 18-month period

“Overall total payments in nominal terms increased by over 6% in June, arresting the slowdown in total nominal payments made over the last ten months,” said Shergeran Naidoo, head of Stakeholder Engagements at BankservAfrica.

“Again, this is owed to the temporary payments to staff who were contracted during the elections. Many were government employees and a substantial number were previously unemployed – or did not have regular formal income.

“As such, the overall take-home pay increased, which the BankservAfrica index made allowance for in the average take-home pay numbers and percentage change numbers,” said Naidoo.

Mike Schüssler, Chief Economist at economists.co.za said that this increase could give a boost to consumer spending.

“The very fact that the banked wage income is rising points to a temporary growth in consumer spending for June – and most likely in July as well,” he said.

Consumer inflation flat

StatsSA data out on Wednesday showed that annual consumer price inflation was 4.5% in June 2019, unchanged from May 2019.

The consumer price index increased by 0.4% month-on-month in June 2019, the stats body’s data showed.

This marks the seventh consecutive month that year-on-year inflation was at or below the midpoint of the target band, said Luigi Marinus, portfolio manager at PPS Investments.

The contributions to year-on-year inflation however changed to some extent. Food and non-alcoholic beverages, alcoholic beverages and tobacco and housing and utilities contributions increased from 0.5% to 0.6%, 0.3% to 0.4% and 1.1% to 1.2% respectively.

Declines in contributions included transport, from 1.0% to 0.8% and the residual from 0.1% to 0%.

Month-on-month inflation had a slight uptick from 0.3% in May to 0.4% in June, which was made up of a 0.1% increase in food and non-alcoholic beverages, a 0.2% increase in housing and utilities and a 0.1% increase in transport.

“With inflation seemingly under control and a number of central banks worldwide easing short-term interest rates, the South African Reverse Bank (SARB) decreased the domestic repo rate by 25 basis points at the recent Monetary Policy Committee meeting providing some long-awaited respite for South African consumers, but inflation expectations over the medium-term will be closely watched before the SARB provides further relief,” Marinus said.

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