With the January fuel price expected to top 51 cents a litre and diesel more than 40 cents a litre, far more worrying is the slew of bad news showing that consumers are in for a rough ride in 2017.<\/p>\n
A Reserve Bank rate increase is likely after the US Federal Reserve\u2019s decision to increase its rate by a quarter percent, while further electricity hikes will up the debt load that consumers will have to carry in the new year, said Debt Rescue.<\/p>\n
It pointed to an economic report by think tank FocusEconomics, which paints a bleak picture for the South African economy in 2017.<\/p>\n
Its team of economists and analyst have revised GDP growth expectations for the country even lower than predicted by government suggesting that it might be as low 0.5%.<\/p>\n
\u201cThe county\u2019s outlook is dim. The electricity and water supply constraint will hamper growth by both interrupting production and by discouraging investment,\u201d the report stated.<\/p>\n
The BankservAfrica Economic Transaction Index (Beti) report meanwhile, claims that the country is in a per capita recession because real incomes have been in decline for at least the last three years due to economic growth being slower than population growth.<\/p>\n
\u201cThe highly regarded Beti report shows that South Africans have seen their incomes decline in real terms for the past three years on average. All these indications suggest that 2017 could be the fourth year of the per capita recession,” said Neil Roets, CEO of Debt Rescue.<\/p>\n
\u201cIt seems sad that we have to be so pessimistic at such a happy time of the year but the sooner consumers realise that the economy is in trouble and tighten their belts, the fewer of them will have to come to us to bail them out by placing them under debt review, Roets said.<\/p>\n
Many South Africans who barely make ends meet during the year are plunging themselves even deeper into debt this holiday season by spending money on expensive holidays and generally having a good time \u2013 often on credit cards or with money borrowed from money lenders at exorbitant interest rates, Roets said.<\/p>\n
\u201cWe see more new clients seeking help with the repayment of their outstanding debt in January and February than during any other month of the year because of additional debts that had been stacked up during the holiday season,” Roets said.<\/p>\n
\u201cParents suddenly realise that they have to pay school fees that had not been budgeted for and with credit cards maxed out on luxuries in November and December many have no choice other than to seek relief by going under debt review to prevent debt collectors from seizing their property.\u201d<\/p>\n
Roets warned that 2017 was going to be a tough year and that consumers who had difficulty making ends meet in 2016 were going to find it much harder in the new year.<\/p>\n
\u201cWith food inflation running at 11% and the Consumer Price Index (CPI) running at 6.6% – well above government parameters –\u00a0 there is not the slightest possibility of relief in sight for consumers.<\/p>\n
\u201cTotal consumer debt now stands at close to R1.6-trillion which clearly shows that South African consumers have not cut back on spending. A recent World Bank index has also shown that South Africa is one of the most indebted countries in the world,” Roets said.<\/p>\n
He said more than half of all consumers were three months or more behind in their payments. The major culprits are credit and store cards followed closely by unsecured debt.<\/p>\n