Frugal festive season for hard-hit consumers
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Economists have warned that it is going to be a frugal festive season as hard-hit consumers try to bite through tough economic times and financial strain.
With unemployment at 46% and fuel prices reaching R20 per litre, experts have expressed concerned that the country faced poor prospects of an economic recovery and this would impact on consumer spending patterns.
Economist Iraj Abedien said: “We should be concerned of the impact that these variables will have on consumers.
“We should expect people to be prudent in spending the little money they have.”
He said many would hold tight on their savings as these are “rainy days”.
“The rise in costs have brought to the fore the need to be cautious when it comes to spending.
“The reality is that we're facing uncertain times,” Abedien said.
Abedien also called on the government to “stop talking about plans” but to implement them.
“Cabinet ministers, mayors and premiers are being paid to find and implement solutions.
“We cannot be listening to plans all the time,” said Abedien.
Another economist Dawie Roodt said although the country might face a subdued festive spending, it would not be as “bad as in 2020”.
However, he expressed concerns at the impact of the rising costs on consumers.
“I am extremely concerned that the impact on the poor has been exacerbated by the rise in fuel prices and eventually the inflation rate.
“The state will start spending less and the social grants will fall in real terms over the next couple of years as the government has run out of sources for money,” said Roodt.
He also warned that economic growth would not happen “for a long time” until serious adjustments were made.
Data collected by the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) showed the cost of food rose by 6% over the last year while headline inflation was at 5%.
The PMBEJD’s Household Affordability Index for November 2021 showed a slight decrease in food prices.
The average cost of the PMBEJD Basic Nutritional Food Basket for a family of three or four persons in November was at R4 272.44, down by R45.11 (-1%) from October.
However, year-on-year the average cost of the food basket increased by R254.19, about 6.3% from R4 018 in November 2020.
The organisation tracks prices of 44 core food items commonly used by households including Du Noon, Philippi, Gugulethu and other townships in the country.
The report indicated that although the decline in prices in November was inconsistent with past trends, food prices were “extremely volatile” at the moment.
“Our analysis is that food prices will continue their upward trajectory for the foreseeable future.
“The festive season always ushers in higher prices and unbelievable savings.
“Women always tell us the festive season prices are a bit of a swindle and sometimes you get lucky but most of the time you pay more.
“This Christmas is different, we have been in various degrees of lockdown.
“Mothers are desperate to buy their children new Christmas clothes and put together a special family meal to celebrate family, surviving the year, and building hope for the future,” said the organisation, adding that it would be important to keep fair prices.
Mitchells Plain mother Toni-Leigh Davies said even a R1 000 could not buy a full-tank of fuel for their car.
“I was laid-off from work during the pandemic but I am freelancing now.
“My partner is in the tourism industry and has to use his car daily.
“We will have a tight festive season and will not buy each other or family members gifts for Christmas. Only the baby will get a gift,” said Davies.
The Studies in Poverty and Inequality Institute (SPII) also warned that with 77% of under 24-years old were unemployed and with no hope of finding jobs, the country was a “tinderbox” where violence was the language used and people had nothing to lose if they took.
“We risk a country where there is no hope that things will get better,” said Institute director, Isobel Frye.
“SPII has done research that shows that a universal decent basic income – a grant of R1 335 – which is the poverty line will lift everybody out of poverty.
“Immediately. Wealthy people will have it taxed back so that no-one who is in need fails to get the grant like we see now with the R350 Social Relief of Distress.
“People will have enough to eat and enough to start trying to start micro enterprises, knowing that they will not lose their monthly income if they fail,” said Frye.
Frye said: “Our economy is based largely on extraction and financial services and we have shrunk our manufacturing base and skills.
“We privatised Iscor so everything costs more as we have to buy our own materials back.
“We recently made commitments to clean our coal energy – but coal mining is one industry that still creates jobs.
“Our employment rate according to the International Labour Organisation is 37%, in Tanzania it is 81% and Kenya it is 70%,” she pointed out.