How much money is in your account the day before pay day?

South African consumers are facing tough times as data from Standard Bank reveals that nearly half of salary earners are left with less than 1,000 rand or have negative balances by payday. On the other hand, the latest Absa Merchant Spend Analytics report shows a slight increase in consumer spending on a month-on-month basis. Isana Cordier, the Head of Consumer Goods and Services Sector Coverage at Absa CIB, and Kabelo Makeke, the Head of Personal and Private Banking at Standard Bank, recently discussed the trends in consumer health in South Africa. Cordier described the current consumer spending as muted, with only a 3% growth year-to-date in September. This slow growth is evident across all categories, including non-discretionary spending like food and groceries. Factors such as a high interest rate environment, inflationary increases in essential goods like petrol and electricity, are putting pressure on household consumption. Makeke added that the situation has worsened since the COVID-19 pandemic, with lifestyle inflation becoming a trap for many consumers. Despite income growth not keeping pace with spending patterns, the emerging middle class is the hardest hit. Even high-income earners are feeling the pressure, with one in ten private banking customers also struggling to make ends meet. The data from both Absa and Standard Bank suggests that consumers across income groups are experiencing financial strain. Retail companies are also echoing this sentiment, with shifts in spending patterns noted. For instance, the share of wallet for food categories has decreased, indicating a move towards essential non-discretionary items. Furthermore, the reliance on credit has increased, especially among the emerging middle class. While higher LSM customers are more adept at managing credit, overall debt burdens have risen. The report is compiled monthly, with a focus on monitoring gambling spending, online betting, and the impact of the two-part system on consumer behavior. Looking ahead, Cordier and Makeke anticipate a continued period of depressed consumer spending. While there may be some positive momentum with the two-part system, the gap between income and expenses needs to narrow for sustainable recovery. As consumers navigate these challenging times, the focus remains on balancing spending, debt management, and driving responsible financial behavior. In conclusion, the current economic environment in South Africa is creating significant challenges for consumers, with careful financial planning and prudent decision-making becoming more critical than ever.