Consumer spending habits evolve to focus on budgeting, value and trade-offs

Hylton Kallner, CEO of Discovery Bank.

Hylton Kallner, CEO of Discovery Bank.

Published Apr 7, 2024


Global consumer spending and saving habits were evolving to focus on budgeting, value and trade-offs amid the rising interest rates, the SpendTrend24 report shows.

Discovery Bank and Visa released their latest SpendTrend24 report, a comprehensive study of consumer spending habits, on Thursday.

Hylton Kallner, Discovery Bank CEO, said their latest research highlighted that throughout last year, global economies navigated a complex path of post-pandemic revival, framed by persistent inflation and high interest rates.

“These challenges pushed up the cost of living, prompting consumers to adjust their spending habits. The analysis allows us to explore the effects of these challenges and to compare the spending patterns of typical South Africans and Discovery Bank clients with those of other emerging and developed markets,” Kallner said.

SpendTrend24 said consumers were clearly becoming more cost conscious and cautious about their spending habits as global nominal disposable income growth was constrained by rising inflation rates. In response to the financial pressure of higher interest rates, consumers were said to be changing how they spend and save money.

Despite such a challenging macro-economic environment, South Africa has proven to be highly resilient compared to its global peers, based on spend data.

South African cities showed more stable year-on-year spend patterns and less segment volatility compared with many global counterparts. South African consumer expenditure growth stabilised last year, lagging inflation by two percentage points, the report showed.

Kallner said this comparison highlighted South Africa’s economic resilience, with South African cities demonstrating more stable spending patterns year-on-year and less fluctuation in spending across different market segments compared to cities in emerging and developed countries.

For the local population, groceries, retail, travel and fuel made up nearly two-thirds of South African spend.

“Overall, emerging market cities spend a higher share on groceries and fuel and a lower share on travel compared to developed market cities, which also spend a higher share on eating out and takeout. Global travel volumes have largely returned to pre-pandemic levels, but at a higher cost, indicating a recovery in the travel industry with evident inflationary pressures,” he added.

Personal consumer spending growth in South Africa steadied last year after the surge seen in post-pandemic spending in 2022. While consumer spending in South Africa outpaced inflation by 19 percentage points in 2022, the growth in consumer spending closely matched inflation last year.

Spend on food, including groceries, takeaways and dining out, has generally increased in most cities. In emerging markets, a larger part of the budget went to essentials like groceries and fuel, with less spent on non-essentials like travel.

SpendTrend24 said variances existed in the share of category spend across markets and segments. It showed that spend increased among the affluent and high-net worth segments worldwide, with the mass segment experiencing modest growth or even declines.

“Choices appear to be made between affordability and convenience, with segments and markets differing in their share of spend on groceries, eating out, takeout and travel,” said Kallner.

The benefits and increased security of digital payment options were driving rapid adoption globally, with consumers in global cities increasing their use of digital wallets and online purchases. South Africa was said to be benchmarking well against global counterparts, with an impressive nine percentage point increase in digital wallet usage over the last year.

Lineshree Moodley, Country Manager for Visa South Africa, said despite economic challenges, South Africa has shown remarkable resilience.

“The launch of SpendTrend24 charts the path forward in our digital economy, and we firmly believe that with the valuable data and foresight provided by the research, individuals, businesses and economies are empowered to innovate, foster financial inclusion and drive meaningful change in the face of evolving consumer demands and business needs,” Moodley said.

This latest report was based on over 13 billion transactions made on more than 60 million credit cards from 14 cities around the world, including three South African cities, five emerging-market cities, and six developed-market cities, from 2019 to last year.