Price increases coupled with increasing borrowing costs will put consumer disposable incomes under pressure in coming months‚ according to the BankservAfrica disposable salary index (BDSI) released on Friday.
The index showed that the increase in disposable incomes would be slower than inflation for the rest of the year‚ leaving consumers with less money to pay their bills.
BankservAfrica’s CEO for regulated products‚ Brad Gillis‚ said this would affect low-income earners the most. About 70% of the workforce took home less than R12 000 a month‚ he said.
South African take-home salaries averaged R11 641 in February 2014‚ which was 6.4% higher than a year ago‚ he said. However‚ in real terms‚ take-home pay increased by only 0.5% in December year on year. After being smoothed and adjusted‚ the index actually declined by R12 between December 2013 and January 2014.
“The January 2014 change is the lowest increase in both real and nominal terms in seven months and February remained flat‚” Mr Gillis said. He said that while it seemed that South Africans with formal-sector jobs had in general received take-home pay increases above the rate of official inflation‚ the rate of real increases was “fast declining”.
“It is quite possible that South African disposable salaries will again dip below the rate of inflation as inflation increases and salary increases decline in nominal terms‚” Mr Gillis said.
The consumer price index (CPI)‚ which measures consumer inflation‚ rose 5.8% year on year in January from 5.4% in December. Rising inflation‚ coupled with a 50 basis points increase in interest rates in January‚ will leave consumers with less disposable income.
In December 2013‚ the average disposable salary payment was an unadjusted R12 834‚ which was only 2.3% higher when compared with December 2012.
Economists.co.za chief economist Mike Schussler said at least part of the slowdown in increases was probably due to lower bonus payments as the economy struggled to gain traction and sales or production targets were not made.
“One suspects that the chances of high take-home pay increases are quite slim for 2014‚ as many people are pointing out that the economy is struggling with capacity constraints and disruptions such as strikes.”
He said it was estimated that the strike in the platinum sector decreased the number of monthly payments by close to 50 000 pay cheques per month. “According to company information‚ the losses for platinum workers are now over R3bn in lost wages — and this is only for the platinum strike.”