Consumers are under pressure from the high cost of living, with many unable to keep up with debt repayments.
Senior Economist at ABSA, Miyelani Maluleke, says the high interest rate environment is eroding household disposable income.
Maluleke says there are signs of rising consumer debt distress with more people falling into payment arrears.
He says a subdued consumer spending environment will also dampen the already weak growth momentum.
“One of the things that will continue to constrain growth, we think, is that when we look at the demand side of the economy, we think about the consumer specifically. It’s clear that there is a fair bit of pressure that is building on that… interest rates have gone up quite significantly over the last couple of years. We’re seeing the effects of that. Clearly, in debt service costs, which are really taken away from people’s disposable income. We’re also seeing that wage inflation also hasn’t really caught up with headline CPI inflation. So, people have been seeing some real disposable income erosion from that perspective as well.”
VIDEO | Tough times for consumers as they battle to honour debts: