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Pressure on consumer salaries in SA is the focus in this edition of Business Day Spotlight. 

Host Mudiwa Gavaza is joined by Senzo Nsibande, CEO of FNB Money Management.  

This week, FNB reported it estimated that it took an average of five days for a middle-income consumer to spend up to 80% of their monthly salary. This suggests that the average middle-income consumer, earning between R180,000 and R500,000 per annum, survives on 20% of their monthly salary for more than 20 days in a month.

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Nsibande explains that SA consumers are under pressure at the moment, given an economy trying to recover from the Covid-19 pandemic and rising inflation. 

This is against the backdrop of the Reserve Bank’s announcing its largest interest-rate hike in six years on Thursday.

The 50-basis-points increase to 4.75% came despite the Bank reducing its GDP growth forecast for 2022 to just 1.7%, from 2% at the March meeting, citing recent flooding in KwaZulu-Natal and Eskom power cuts.

The Bank upgraded its inflation forecast slightly to 5.9% for the year — just below the upper end of its target range — and said it would then slow to an average of 5% in 2023 and 4.7% in 2024. The fourth consecutive rate increase came as a spike in global inflation has prompted central banks from the US to India to hike borrowing costs.

Nsibande says interest rates are likely to keep rising, which adds to the impetus for well-planned finances particularly for those carrying some sort of debt. This is because salaried middle-income consumers with secured and unsecured credit, spend 30% of their income on average on unsecured credit and 35% on secured credit, he explained.

Topics of discussion include: items weighing on consumer spending at the moment; the growing threat of inflation and higher interest rates for consumers; planning finances to weather current economic headwinds; as well as balancing earnings growth versus savings. 

Engage on Twitter at #BDSpotlight

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 Business Day Spotlight is a MultimediaLIVE production.


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