South Africans Face Deepening Financial Crisis as Purchasing Power Plummets

South Africa’s economic crisis continues to worsen, with new data revealing citizens now have significantly less purchasing power than they did in 2016. The latest evidence of financial distress comes from reduced Easter spending, as households prioritize essential expenses.

Consumer Spending Patterns Reveal Economic Strain

Standard Bank data shows even traditionally busy travel periods failed to boost consumer activity. “Holiday and travel spending has become more erratic as people cut back on non-essentials,” said Shené Mothilal of Standard Bank’s Digital Money Manager.

Key findings include:

• Transport and digital connectivity costs consuming larger income shares
• Bonus payments increasingly used for groceries rather than discretionary spending
• Charitable donations declining for 3-4 consecutive years

Debt Crisis Reaches Record Levels

Video credit to: RESULTS ORIENTED PREPARATION WITH KENNETH PHIRI

Benay Sager, executive head of DebtBusters

The Q1 2025 Debt Index reveals alarming trends:

• 91% of debt counseling applicants have personal loans (record high)
• 37% rely on payday loans
• Average debt servicing costs now consume 69% of take-home pay

Historical Comparison Shows Dramatic Decline

Compared to 2016, South Africans face:

• 53% decline in purchasing power
• 135% increase in electricity costs
• 88% higher petrol prices
• 52% cumulative inflation

Income Groups Equally Affected

The crisis spans all income levels:

• High earners (R35,000+): 77% income spent on debt
• Low earners ( 76% income spent on debt