As the festive season approaches, a recent Debt Rescue survey has revealed a disheartening picture of a nation grappling with severe financial distress.
With household budgets offering little in the way of seasonal joy, it appears that many will be trading in festive cheer for financial caution this year.
The survey revealed that a massive 68% of people said they have no plans to travel and 62% attributed their decision to the high fuel costs, it’s evident that this will be a stay-cation festive season for most South Africans.
“It’s clear from our festive season survey results that millions of hard-working citizens who were looking forward to their annual trip to visit friends and family during the end-of-year holidays will no longer be able to afford this once-a-year luxury,” said CEO of Debt Rescue Neil Roets.
“This points to the deep financial waters the average South African finds himself or herself in as we head into 2025,” he said.
The survey provided an in-depth analysis of the current consumer spending patterns, focusing on the festive season's expenditures in the face of the nation’s economic hardships.
“It came through strongly that people are planning to spend far less on Christmas gifts this December, with 71% saying they may have to give up on any gifting purchases at all, a tradition which lies at the heart of South Africa’s season of goodwill,” Roets said.
“When the majority of the nation is unable to afford exchanging gifts during this season of giving, we need to sit up and take notice,” he added.
57% of consumers who participated in the survey say high inflation is definitely a primary driver behind the changes in their festive spending behaviour, with others citing the still-high repo rate.
Significantly, 66% of people polled say they will be actively seeking out and purchasing low-priced items and this ranges from gifts and technology to essential food and toiletry items, and even clothing - while 56% will simply be cutting down on purchases across the board.
In terms of financing festive expenses, a significant percentage (51%) prefer using cash, suggesting a cautious approach to avoid running up more debt.
“This is particularly relevant in a high interest rate environment where debt becomes more expensive, and this behaviour reflects a shift to heightened financial caution,” Roets explained.
It bears noting that, for millions of South Africans, a full plate of wholesome food is all they can look forward to over this season of goodwill – and this only on special holidays like Christmas, Hanukkah and New Year.
Indeed, even this will be out of reach for at least half of households across the country, as the price of the household food basket continues to skyrocket.
According to the latest Household Affordability Index, the average household food basket has increased by 0.9% year-on-year, costing R5,361.04 as at November 2024.
The Programme Coordinator for the Household Affordability Index, Mervyn Abrahams says the general trend of the household food basket remains high.
“Many households in South Africa remain unable to afford such a food basket and with Christmas shopping and back-to-school costs looming in January, families will be forced to dig deep into their wallets while their food baskets get smaller,” Abrahams said.
“This makes it increasingly challenging to maintain traditional festive meals,” he added.
The cold, hard truth is that many purchases will be made by swiping credit and store cards, and this excessive debt will need to be repaid, perpetuating the cycle of debt for households, at a time when their financial predicament is already dire.
“My advice to those who find themselves in a debt trap is to seek help through debt review, where a registered debt counsellor can assist you to manage your financial predicament. It is never too early to ask for help,” Roets said.
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