The future holds tough times for those in debt

TI IE expected price increase in the price of petrol by about 80c a litre as well as a sub¬stantial increase in the cost of electricity is going to hit the consumer like a ton of bricks.

Independent economist Dawie Roodt said the fuel price increase was largely due to the weakening rand and the increase in the cost of crude oil.
Credit solutions firm MBD’s consumer financial vulnerability index showed that the finances of South African consumers are under pressure from too much debt and spending more than they earn.
The index research, conducted by the Bureau of Market Research (BMR) and the department of taxation at Unisa, showed that the benefits of lower fuel prices, which have helped boost disposable incomes and finances, were not being felt by all. It showed that public transport costs increased by 7.4% in the fourth quarter of last year.
It also confirmed that consumers’ debt- servicing capabilities remained their biggest concern and cause for financial vulnerability in the fourth quarter of last year.
BMR economist Jacolize Meiring said the pressure on consumer finances was intensified by prolonged labour strikes, some substantial price increases and slow employment growth that negatively influ¬enced income levels.
Neil Roets. CEO of Debt Rescue, said the present combination of economic factors had all the makings of a perfect storm.
“Indebted consumers owe 75% of their net earnings to creditors.” Roets said.
“Once they have serviced their mostly overdue debt, very little money is left for essentials like food, clothing, transport and school fees.” – Sapa

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