Financial crunch hitting consumers hard

JOHANNESBURG - More South African consumers are said to be resorting to credit to cover the costs of essential goods and services.

This as the country’s financial crunch comes to a head.

Red-hot food and fuel prices, and high borrowing costs continue to put households in a tight spot.

Nedbank’s latest money supply and credit report shows a weaker household market.

This is mainly a result of higher interest rates and poor economic conditions eroding household confidence.

It says the strain on some consumers has made it harder to keep up with up with their expenses.

As a result, commercial banks have been more cautious in extending credit to overburdened consumers, closing the tap on credit.

Looking ahead, Nedbank’s economic unit says it expects credit demand to remain subdued for the first half of the year.

The cumulative impact of the interest rate hikes, heightened policy uncertainty ahead of the general elections and fragile confidence are all expected to put households off borrowing and unnecessary spending.