Consumers continue to feel cash squeeze

Consumers are still under pressure from too much debt and spending more than they earn‚ a survey into financial vulnerability has found.

Credit solutions firm MBD said yesterday the benefits of lower fuel prices were not being felt by all consumers. The index showed that public transport costs increased by 7.4% in the fourth quarter of last year.

The survey found that consumers’ debt-servicing capabilities remained their biggest concern and cause for financial vulnerability in the fourth quarter of last year.

This was mainly due to the cumulative 75-basis-point increase in interest rates last year.

Banks’ decisions to be stricter on credit extension also played a role.

Bureau of Market Research (BMR) economist Jacolize Meiring said the pressure on consumer finances was intensified by prolonged strikes‚ some substantial price increases, and slow employment growth that negatively influenced income levels.

The index declined slightly to 51.2 in the fourth quarter of last year from 51.4 points in the previous quarter.

Meiring said a reading of 50 to 59.9 meant consumers were feeling mildly exposed financially.

This meant they “are not feeling secure” in their finances‚ she said.

The index measures the cash-flow status of consumers by measuring how vulnerable they are when it comes to income‚ expenditure‚ savings and debt servicing.

Compilers said information had been collected from 102 institutions, including municipalities‚ credit providers and banks.

The index research was conducted by the BMR and the department of taxation at Unisa on behalf of MBD.

– BDLive

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