Pretoria - Spending in South Africa contracted in the fourth quarter of 2013 as households curbed consumption and the pace of growth in fixed capital spending declined, the central bank said on Wednesday.
In its quarterly bulletin, the South African Reserve Bank said spending growth contracted 3.6 percent in the fourth quarter, from a revised 0.8 percent contraction in the third quarter.
Tighter lending conditions combined with higher consumer prices led to slightly reduced spending by households in the last three months of the year.
“Household income continued to be negatively affected by rising inflation, the adverse effect of widespread labour unrest and indirectly by the deterioration in the country's terms of trade,” the Bank said.
A decline in credit extended to households resulted in a slight reduction in the indebted ratio to disposable income in the quarter.
Growth in household debt also slowed on an annual basis, to 7.3 percent in 2013, from 8.6 percent in 2012.
The household debt to disposable income decreased by a marginal 0.4 percentage points to 75.2 percent in 2013 from 2012.
Government increased spending in the final quarter of the year to 2 percent from 1.5 percent in the previous three months, helped by spending on former President Nelson Mandela's state funeral in December.
Portfolio inflows, which have historically funded the current account, reversed in the fourth quarter.
The financial account saw outflows totalling 30.8 billion rand, compared with 48.8 billion rand in inflows in the third quarter, with foreign direct investment also lower. - Reuters