South Africa’s take-home pay for October increased the most in two years and reached new highs in value, the latest BankservAfrica Take-home Pay Index (BTPI) shows.
This index measures wages that are transferred to employee bank accounts.
“Take-home pay reflected a high nominal increase of 7.2% on a year-on-year basis and reached R16,173. This is the first-time average take-home pay reached the R16,000 level,” said Shergeran Naidoo, head of Stakeholder Engagements at BankservAfrica.
“In real-terms, the BTPI increased by 3% year-on-year owing to slightly fewer actual payments, particularly in the lower end of monthly take-home pay.
“The average real-time payment was R14,300, the third-highest level ever recorded by BankservAfrica.”
Naidoo said that the above-average rises in take-home pay in October were on the back of consumer price inflation (CPI) dropping to its lowest levels in eight years.
Inflation and Black Friday
Mike Schüssler, chief economist at economists.co.za, said that it is important to note that many salary adjustments are linked to the Consumer Price Index (CPI).
Therefore, lower inflation will probably lead to lower nominal increases over the next year, he said.
“However, the latest data shows inflation is expected to rise again. Back-dated wage increases for civil servants and year-end bonuses were the other reasons for the higher than usual real salary increases.”
Schüssler said that the October take-home pay increase is likely to be a boost for retail sales in November.
“If the real take-home pay increases at the end of November are anywhere near October’s levels, Black Friday sales will spike significantly,” said Schüssler.
He added that the BankservAfrica Take-home Pay Index indicates October and November consumer spending will be as good as the increases seen last year – if not even better.