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Annual growth in real take-home pay has been negative since October last year, which means growth in nominal incomes has been more than offset by higher inflation for eight consecutive months - and consumers are relying on record levels of credit, says Nolwandle Mthombeni.
On numerous occasions, the Monetary Policy Committee (MPC) members have been asked whether the SA Reserve Bank (SARB) got it wrong and moved too slowly to curb inflation. It is a question that has been posed to central banks all over the world. As impairments rise, we will soon have to direct some attention towards credit providers and ascertain whether they moved too slowly in curbing credit extension to consumers.
The rampant rise in inflation has left no household untouched. Whether it's food, petrol or debt repayments, consumers across the spectrum are getting squeezed. There is a possibility that second quarter GDP data may beat expectations when it is published in September. The latest BankservAfrica Economic Transactions Index (BETI) suggests that economic activity during the second quarter has been resilient. The recovery in manufacturing and new vehicle sales are cited as some of the drivers of any potential upside surprise to the next GDP print. Anecdotally, some of this seems disjointed from the reality of how consumers are faring.
