South Africans are getting poorer with salaries and wages not keeping up with inflation – and prospects for 2024 and 2025 look dim.
The Bureau for Economic Research says that South African salaries have not been keeping up with inflation for several years, putting households under significant strain.
Food price inflation, in particular, hit the double-digits, fuelling an affordability crisis. A cumulative 475 basis points also hiked interest rates to 15-year highs in 2023.The economist said that things are likely to improve this year, with inflation coming down and interest rate cuts expected in the coming months. However, whatever relief lies ahead, South Africans won’t be able to loosen their belts until salaries start increasing above inflation.
The latest data from the BER shows that salaries and wages increased by 3.8% in 2022 and 4.6% in 2023, while inflation averaged 6.9% and 5.9%, respectively.For 2024, salaries and wages are expected to increase by an average of 4.9%, according to the BER Survey of Inflation Expectations 2024Q2, while the average inflation forecast ranges between 4.9% and 5.3%.
This will result in a marginal 0.1% to 0.3% increase in buying power—meaning South Africans will still have a long wait ahead for real wage growth to arrive. Consumer insights and data science firm Eighy20 showed in its latest study that the middle-class and ‘wealthy’ segments in South Africa—those earning over R15,000 and R35,000 a month—carry a debt-to-income ratio of 56% and 85%, respectively.The BER’s consumer confidence survey shows a disjoint between households’ views on the economy and their finances.
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