This is what South Africans are doing to make it through the month

South African consumers are stretched financially, with many changing their habits to ensure they do not waste money.

South African consumers are being hit with high levels of inflation, which is especially the case when it comes to groceries.

Although food inflation dropped to an 11-month low in June, its reading of 11% is still relatively high.

Some categories even saw an increase in inflation, such as vegetables, fruit, sugar, sweets, and desserts, accelerating from 11.9% to 16.4% – the highest reading since June 2017.

Amidst the growth in food prices, 46% of participants in Deloitte’s June 2023 Food Frugality Index said that they engaged in three or more frugal behaviours to make ends meet.

Deloitte said that this highest level of frugality was measured across the 13 countries in the index, with Canada coming second (37%) and Brazil third (36%).

The index looks at behaviours associated with financial stress at grocery stores and how they shape the way consumers buy food.

Consumers cutting back

Deloitte said that consumers are making several trade-offs in their purchasing decisions whilst also looking to economise. Consumers are primarily using strategies in the economise bucket.

For instance, 58% of respondents said that they saved by reducing waste levels in their homes. This led to consumers buying fewer fresh products and more shelf-stable foods.

When buying fresh produce, consumers are often doing this with a meal in mind while also considering price and portion size.

Additionally, consumers are not buying unnecessary products, with 51% of respondents in May saying that they only buy essentials.

“However, perhaps the most startling finding is that a third of respondents (35%) said they bought less than they wanted, this behaviour of buying less than wanted goes beyond mere food frugality and could hint at the presence of food insecurity,” Deloitte said.

In terms of the trade-offs bucket, 39% of respondents said that they are switching to cheaper meats, whilst 34% are buying lower-cost ingredients, including dried beans, rice, and lentils.

Deloitte noted that 32% of participants are still buying store and private-label brands, as South African consumers continue to remain brand loyal.

“Compared to May 2023, there was a slight improvement in sentiment across the trade-offs, possibly buoyed by inflation showing signs of cooling for a second month. Frugality in the survey also dropped below the September 2022 baseline across most underlying behaviours,” Deloitte said.

It added that the low-growth and high-inflation environment predicted for South Africa will likely keep consumer sentiment subdued for a while.

80% of respondents added that they expect higher grocery prices over the next month across major categories.

Other cutbacks

In addition, Deloitte’s latest State of the Consumer Tracker (May-Jun 23) said that total spending habits have been tracking in the lower range since December 2021 – ignoring a peak in July 2022 – and at the lowest rate since September 2022 – with no signs of improvement.

With ongoing pressures and high-interest rates, spending intentions for non-essentials are likely to continue on a downward trend.

Deloitte said that consumers are already cutting back on electronics (4%), eating out at restaurants (4%), and buying everyday household goods (5%) to get through the month.

However, there are hopes that relief will soon be on the horizon for South African consumers.

“With inflation cooling, there is a glimmer of hope on the horizon, however, the road ahead remains challenging and somewhat unpredictable,” Deloitte said.

“Retail sales still face a long path to recovery; however, history shows that events like pandemics and inflation spikes will pass. But what is more difficult to predict is how long consumers will continue with their frugality behaviours and what it will take to improve sentiment.”

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