In 2023, South Africans are battling an unprecedented cost of living crisis, with sky-rocketing food and housing costs, coupled with a relentless energy crisis, pushing millions to the brink of financial survival. File Picture: Armand Hough / Independent Newspapers
In 2023, South Africans faced a formidable cost of living crisis, marked by soaring food prices, escalating housing costs, and a relentless energy crisis.
This multifaceted economic challenge has left millions grappling with the harsh realities of daily survival.
A significant contributor to the crisis was the ongoing energy dilemma, primarily load shedding.
South Africa faced a record number of load shedding days in 2023 which had a devastating effect on the economy.
The Competition Commission's Essential Food Price Monitoring Report revealed that load shedding had a profound impact on the food value chain, exacerbating food prices.
Major food companies and retailers reported substantial additional costs due to load shedding, which inevitably trickled down to consumers.
For instance, Shoprite's South African Supermarkets division incurred R1.3 billion in load shedding expenses, while Spar spent over R700 million on diesel costs in just six months of 2023.
Despite a decrease in headline inflation, food inflation remained stubbornly high, nearly double the overall inflation rate.
The "rocket and feather" effect, where prices rise quickly but fall slowly, was evident in staple foods like beef, mealie meal and bread.
Global disruptions, including the Covid-19 pandemic and the Eastern European conflict, further fuelled inflationary pressures.
The BankservAfrica Take-home Pay Index (BTPI) indicated that salaried workers found life increasingly expensive.
Consumer inflation reached a 13-year high of 6.9% in 2022, eroding the purchasing power of households.
The average nominal take-home pay declined, leaving workers squeezed by higher costs for essentials like food, fuel, and electricity.
The housing market also felt the pinch. Rising interest rates affected homeowners, triggering home sales and pushing more people into the rental market.
The FNB Property Barometer showed that 17% of property sales were due to financial pressure.
Additionally, South Africa's unemployment rates, though slightly improved, remained a significant concern.
The state of the residential property market in 2023 was not promising. Inflation adversely affected those needing to rent homes, with most tenants paying between R3,000 and R7,000 per month. The market also faced challenges due to a significant number of properties not on the national Deeds register, impacting municipal revenue and service delivery.
The rising cost of living in South Africa also exacerbated mental health concerns.
The Money Stress Tracker survey found that three out of four South Africans experienced money-related stress, a 12% increase from the previous year.
This financial strain led to severe mental health issues, including depression and anxiety, costing the South African economy an estimated R161 billion annually.
Workers earning the national minimum wage faced an uphill battle, with many unable to afford basic household expenses.
The Household Affordability Index showed that feeding a family of four would cost more than the average minimum wage earner could afford, leading to deeper levels of poverty and debt.
As financial pressures mounted, more South Africans turned to credit cards to survive.
However, most applications were declined, and even affluent consumers faced reduced credit limits.
The Experian Consumer Default Index indicated a 32% rise in defaults, signalling widespread financial distress.
The cost of living crisis in South Africa in 2023 was a multifaceted problem, impacting various aspects of life and leaving millions in a precarious financial state.
From energy crises to housing market challenges, the nation faced a daunting task of navigating these turbulent economic waters.
IOL News