The seventh annual Summer Spending Survey by short-term lender Wonga, reveals that consumers in South Africa are projected to spend over R284 billion this festive season.
The survey, which collected data from 13,775 consumers nationwide, finds that consumers plan to spend an average of R6,832 this year, a significant increase from R5,707 in 2023. This marks the highest figure recorded since the survey began in 2018.
James Williams, CMO at Wonga, attributes the substantial rise in festive season spending to several factors, including inflation and recent interest rate cuts.
However, he expressed concern that some individuals have dipped into their retirement savings to fund their holiday expenses, following the introduction of the two-pot retirement system.
On a positive note, he pointed out that 37% of respondents are opting to spend less and save money during the season.
This year’s data shows that only 26% of South Africans have saved for their holiday spending, a decline from 36% in 2023 and well below the 42% recorded in 2019.
“When comparing data from our previous six surveys, it is concerning to see that this is the first time that we have seen the saving figure drop below the 30% mark,” said Williams.
“This is however similar to the results from the recent findings of the Old Mutual Savings and Investment Monitor which reported that only three out of every ten working South Africans are prioritising putting money away for a vacation.”
In a positive shift, fewer people are relying on credit this year compared to 2023. While 20% of consumers plan to borrow money, this is down from 24% last year.
“As seen in previous years, the percentage of monthly earnings spent on festive items decreases as income increases,” Williams explained. “It is however concerning that those earning R2,999 or less expect to spend an average of R3,200, which may lead many lower-income earners to turn to lenders to manage their January expenses.”
Food and beverages remain the largest expenditure, accounting for over a third of the total festive budget, with an average spend of R2,756 per person. This is a significant increase from R1,907 in 2023, reflecting high inflation rates and the rising cost of food and fuel.
Transport costs are expected to make up 17% of the budget, with most consumers opting to travel by car, bus, or taxi. Notably, 10% plan to fly, a sharp rise from 4% in 2023 and just 3 percentage points lower than in 2018.
Gifting is expected to consume 14% of the budget, with money and shopping vouchers as the most popular gifts. Those planning a holiday getaway will spend almost 13% of their budget on accommodation.
Online shopping, once a favourite among South Africans, has seen a decline, with just under 18% opting to shop online this year. Over 70% of respondents indicated they would prefer in-store shopping, while others prefer markets or making their own gifts.
This shift may be due to high minimum spend requirements, expensive shipping fees, and complex return policies on online platforms. Additionally, some consumers are avoiding impulse buying or feeling overwhelmed by the numerous options available online.
“Our key takeaway this year is the impact of the high cost of food and essentials on consumers, as well as the numerous hikes in the price of fuel experienced in 2024,” said Williams.
“Households have been under immense pressure over the past twelve months, receiving some respite towards the end of the year through a slowdown in CPI and interest rate cuts. Despite the challenges we have faced in 2024, over half of our survey respondents are excited and optimistic about the year ahead.”
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