WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2008-12-14 Time: 12:00:07 Posted By: Jan
South African consumers are facing a bleak festive season as fears over high inflation and countrywide job losses threaten to curb shopping sprees.
“Certainly, there is a possibility that the figure [for retail sales over December] would be lower due to debt costs remaining high,” said Goolam Ballim, the chief economist with Standard Bank.
Consumers forked out R52-billion last December, but signs of a slowdown looked more likely on Wednesday after Statistics South Africa revealed that retail sales fell for the sixth month in a row in October, falling 2,3 percent year on year owing to higher interest rates, stricter credit granting laws and high inflation. Household consumption expenditure fell in October for the first time since 1998.
The festive gloom remains even after the Reserve Bank cut the interest rate by half a percentage point on Thursday, a decision accompanied by a warning from Tito Mboweni, the Reserve Bank governor, that consumers should not embark on a spending spree.
Mboweni said the consumption of durable goods, in particular, declined by almost 10 percent, while non-durable goods consumption also contracted.
In addition, motor vehicle sales continued to drop in October and November; the growth rate of credit extension to the private sector continued to be moderate, while year-on-year growth in loans to the private sector declined to 17,1 percent in October.
Growth in mortgage advances and instalment sale credit and leasing finance declined to 16,1 percent and 10,5 percent respectively.
Ballim said tough times and mounting job losses would introduce heavy uncertainty in the minds of shoppers.
“Individuals are likely to opt out of purchasing big-ticket items on hire purchase because it would mean committing themselves over the long term against future income,” he said.
Ballim added that the declining rand, which on Friday closed at R10,08 to the US dollar, could give the economy a boost since people travelled less overseas and would spend domestically on food and travel instead.
“The unfolding profit crunch is becoming more visible. Naturally, the consequence of pressure on profits in the private sector is the unwillingness to invest and the inclination to chop chunky wage bills through shedding jobs,” he said, warning that “2009 is going to be a year of malaise, with no buoyancy in the economy”.
He said firms would seek to strike a better balance between spending and saving and thus try to be more efficient.
Mboweni said inflation was expected to decline further over the coming months and that the South African economy had been affected by the significant global slowdown.
“The international economy is slowing down faster than previously expected and global inflation pressures are subsiding. This has resulted in the recent global interventions by policy-makers.”
The governor said CPIX inflation (headline inflation excluding mortgage interest cost) measured 13,6 percent in August and subsequently declined to year-on-year increases of 13 percent and 12,4 percent in September and October, respectively. Food, petrol and electricity prices were the main contributors to inflation.
John Loos, the First National Bank property strategist, said the drop in the interest rate would offer “little financial relief to the hard-pressed consumer”, but the situation would improve with future decreases.
Marcel de Klerk, the managing executive: Absa Vehicle and Asset Finance, said that, while the interest rate may have dropped by 50 basis points, this does not mean that consumers will feel any less pressured as many have already fallen into arrears.
“We don’t expect the vehicle market to rebound until 2010,” he said. “Affordability is still an issue and the main reason customers have fallen into arrears, especially in the lower income groups.”
De Klerk said consumers tend to skip obligations to banks in December. “This is not the time to risk your home or your car by spending frivolously during the holidays.”
Peter Setou, the senior manager: education and strategy at the National Credit Regulator (NCR), said that consumers would do well to avoid falling into debt.
“In January, there will be demands on our income and we face undue financial stress if we have been unwise in the way we spent our money.”
Setou said that often debt results from an accumulation of many smaller purchases. “Consumers also tend to forget that they must still provide for the usual expenses such as rent, school fees, clothing, food and transport and want to spend most of their available cash on items which they don’t really need and actually cannot afford.”
Lillibeth Moolman, the chairperson of the South African National Consumer Union, said that interest rates still remained high and consumers ought to bear this in mind.