South Africa's rising inflation rates and stagnant incomes have created the perfect storm for surging debt as more consumers turn to credit cards and personal loans to make it through the month.
and supermarkets. The cost of fuel, food, and electricity is soaring, with credit rating agency Moody's predicting that inflation will rise to 8% in South Africa this year, far above the Reserve Bank's target band.
"Nominal incomes were slightly lower than 2016 levels, however, when cumulative inflation growth of 31% is factored in for the same six-year period, disposable incomes shrank by 31% over this period," said DebtBusters of consumers who applied for debt counselling in Q1 2022. Debt exposure has increased for South Africans across almost all income groups but is particularly dire for those earning more than R20,000 a month. Consumers in this income bracket, who've applied for debt counselling, now have a debt-to-income ratio of 150%, the highest ever recorded in a first-quarter report by DebtBusters.
For consumers in the lowest income bracket, earning less than R5,000 a month, the debt exposure to net income ratio has increased from 56% in 2016 to almost 80% in 2022.
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