While the second half of the year saw relief in the form of lower inflation, reduced interest rates, and a reprieve from persistent load shedding, financial strain remains prevalent.

According to DebtBusters' Executive Head, Benay Sager, South Africans are still feeling the pinch as income growth lags behind rising expenses. Over the past eight years, inflation has outpaced income growth by 44%, with essential costs like petrol and electricity increasing at an even faster rate. As a result, consumers now have 42% less purchasing power than they did in 2016, a record high debt-to-income ratio.

"The gap between income and inflation is the biggest factor behind the reduced purchasing power we are experiencing," said Sager. "Many of us are noticing that we can purchase far less now than we could just eight years ago."

Despite some improvements in economic conditions, including falling inflation and interest rates in the latter half of 2024, the debt-to-income ratio remains at a record high. Sager pointed out that the share of net income used to service debt has reached levels not seen since 2017. For the lowest and highest earners, this figure is particularly concerning, with around 72–74% of their income going towards debt repayment, leaving them with little room for essential expenses.

With 2025 on the horizon, Sager urged South Africans to take control of their financial health. “Understanding and confronting debt is key. Don’t be afraid of it, engage with it. Review your bank statements, understand your credit profile, and seek advice from financial professionals if needed.”

With National Debt Awareness month underway, Sager emphasised the importance of using this time to gain insight into money management and debt, helping South Africans make informed decisions about their financial futures.

--ChannelAfrica--