Households feel the pain of tax and fuel increases
Real disposable income contracted for the first time since the last quarter of 2013
Data from the Reserve Bank on Tuesday show the immense strain households have come under due to tax increases and successive fuel price hikes. Real disposable income contracted for the first time since the last quarter of 2013, the data showed, while household spending declined by 1.3% in the second quarter for the first time in two years as people adjusted their spending habits. A weak performance in the retail sector weighed on growth in the second quarter. The retail sector is an important indicator of consumer spending which drives growth in the economy. Finance minister Nhlanhla Nene warned earlier in September that headwinds to household spending, which make up almost 60% of GDP, will hinder a robust recovery in economic growth. Nene said the National Treasury was likely to have to revise down its growth forecast for the year at the medium-term budget policy statement at the end of October. The Reserve Bank last week downgraded its growth forecast for the year from 1.2% to 0.7...
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