Cost of living crisis continues to crush South African wage earners
Cape Town - The cost of living crisis continues to squeeze South Africans, with data from the latest BankservAfrica Take-home Pay Index (BTPI) showing life became more expensive for salaried workers in March.
BankservAfrica’s head of stakeholder engagements Shergeran Naidoo said salaries measured in the BTPI had been disappointing over the past 12 months. Naidoo said: “Consumer inflation reached a 13-year high of 6.9% in 2022, resulting in a notable erosion of the purchasing power of households.”
He said the average nominal take-home pay in March had declined on a monthly basis to R15 321.
Independent economist Elize Kruger said: “With inflation remaining elevated for longer than hoped, and little indication of a notably different economic environment in 2023, salary adjustments and the job market will likely remain lacklustre this year.”
This latest blow comes on top of workers already being squeezed by food inflation and higher fuel, transport and electricity costs. Food and non-alcoholic beverages, and transport were the main drivers behind the 1% monthly change in the consumer price index.
Statistics SA called it “the most significant monthly rise since July 2022, when it was 1.5%”.
The Department of Mineral Resources and Energy yesterday announced the price of both grades of petrol would increase by 37c per litre from today. However, 500ppm diesel is set to dip by 73c per litre, while the cleaner 50ppm diesel will see a smaller decrease of 47c. The price of illuminating paraffin dropped by 33c per litre .
The price adjustment means a litre of 95-octane unleaded petrol will now retail for R22.62 at the coast and R23.34 in the inland regions, where 93-octane unleaded will now cost R23.01.
The wholesale price of 500ppm diesel will now be R19.43 at the coast and R20.15 inland, while 50ppm is listed at R19.79 and R20.50 respectively.
Meanwhile, rising interest rates are affecting homeowners and triggering home sales, forcing homeowners onto the rental market.
The latest FNB Property Barometer, that reflects data for the first three months of 2023, shows 17% of property sales across all values were due to financial pressure.
Lew Geffen Sotheby’s International Realty CEO Yael Geffen said the impact of ongoing interest rate hikes as well as the spiralling cost of living and high fuel price on consumers was significant, especially in the housing market, which had been under pressure for some time.
“We are definitely seeing an increase in distressed sales by homeowners who are no longer able to service their debt and are forced to sell, which is heart-breaking.”
Geffen said this was happening across the board in all sectors but it was most prevalent at the lower end of the market.
“Because nobody is getting salary increases that can accommodate R5 500’s worth of monthly mortgage repayment hikes in 18 months, which is the case for every household in the country right now servicing a R2 million bond.”
She said the sharply rising cost of living and spiralling repo rate was definitely impacting the rental market in a number of ways: people are taking longer to save their deposits to buy and are renting for longer.
“Some people can simply no longer afford to buy a home and homeowners under financial pressure are forced to sell and then rent.”
South Africa has more than 12 million unemployed people, with 75% of those employed earning below R5 800 a month, and the ongoing power cuts have crippled any prospects of creating more jobs.
The April 2023 Household Affordability Index, compiled by the Pietermaritzburg Economic Justice and Dignity (PMBEJD) group, showed the average price of a household food basket was more than R5 000 in April.
The PMBEJD said their calculations, using Pietermaritzburg-based figures for electricity and transport, and the average figure for a minimum nutritional basket of food for a family of four, puts electricity and transport, taking up 58.2% of a worker’s wage, in the R2 011.50 to R3 457.12 income bracket.
PMBEJD co-ordinator Mervyn Abrahams said in an eNCA interview: “Food is bought after money for transport and electricity have been paid for or set aside, leaving only R1 445.62 – for food and everything else.
“In this scenario, there is no possibility of a worker being able to afford enough nutritious food for her family.”
mwangi.githahu@inl.co.za