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The Transunion Consumer Credit Index (CCI) climbed to 53.8 points in the second quarter from 50.8 points in the first quarter, with slowing inflation rate and the recent interest rate cut in five years helping to improve household debt ratios and cash flows.

The index was recorded at 49.2 points a year earlier, below the 50 point level that is considered the "break-even" point.

TransUnion SA chief executive Lee Naik said payment profile data showed generally high indebtedness and weak economic growth challenges for households, emphasising the importance of cautious, diligent lending. “The report notes that declines in the rate of CPI inflation led to the South African Reserve Bank lowering the repo rate from 7% to 6.75% in quarter three 2017, the first reduction in the repo rate in half a decade,” Naik said.

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“This will not have a significant impact on consumers’ wallets, but they may benefit from further rate cuts later in the year as many economists are predicting.” The CCI drew from around 50m accounts held by some 22m individual borrowers. It also looked at distressed borrowing indications on revolving credit (store cards and credit cards), measuring R145bn of revolving consumer credit to gauge the degree of household financial duress. Statistics South Africa has said that South Africans were drowning in debt despite a slight drop in the number of people being summoned to court for owing money in June.

It said Gauteng recorded the highest number of cases at 17603 followed by KwaZulu-Natal at 8800. The agency said more than 48169 debt summons were issued nationally, valued at more than R350m. The value of civil default and consent judgments for KZN came in at more than R42.3m for June this year.

The figure for Gauteng was more than R100m, with the Western Cape second at about R66m. The SA Reserve Bank cut its benchmark rate by 25 basis points last month, citing the improved inflation outlook as one of the key reasons for the accommodative monetary policy stance.

Naik said positive trends could be emerging, but were not strong enough yet to consider them robust or ubiquitous. “Softening inflationary pressures, a firmer currency and the drought relief especially on maize crops have all eased pressure on consumers. However, low economic growth, high unemployment, low wage growth and uncertainty in a volatile global economy all pose significant pressure and risk for consumers.”