South African consumers, like those in other countries around the world, have had a tough last few years.
On the back of the Covid-19 pandemic where lives were lost and the global economy crippled came the Russian invasion of the Ukraine, driving fuel price hikes and causing global shortages in food products like maize, wheat and oilseeds.
As if the resulting significant fuel price increases in South Africa over the past few months have not been enough, annual consumer inflation spiked to 7.4% in June, up from 6.5% in May.
The June rate is the highest inflation in 13 years, since May 2009 (8.0%) following the global financial crisis.
The higher fuel price is a major culprit in the rising inflation levels. Not only does it mean that it costs more for consumers to keep their vehicles on the road, but also that consumer goods cost more because of higher logistics costs. It comes as no surprise, then, that the price of a basic basket of goods is costing more and more.
In a bid to curb this inflation, the South African Reserve Bank (SARB) sharply increased the repo rate by 75 basis points to 5.5% on 21 July 2022. Rising interest rates mean that debt costs more for consumers, including their bonds, credit cards and various types of short-term loans, which decreases their capacity to spend on essential household items.
So what can the average South African do in these circumstances? Here are three tips that can help you when managing your budget so that you’re better able to deal with price increases:
Approach your grocery shopping differently
It’s easy to be on autopilot when we head to the shops – we’re in a rush and we just need to keep the family fed. But with the rising costs of essential items like oil, milk and bread, sometimes we need to relook at what we eat – and therefore what we buy – in order to reduce our bills. Here are some ways to do this:
Consider buying a supermarket’s own-brand instead of your usual choice. These are often further down on the shelves (not at eye level) so seek these out and give them a try – but be sure to check that they are in fact cheaper.
Don’t ignore combo deals – ‘3 for 2’ offerings for example. Yes, you may not need three tubes of toothpaste right now, but you’ll certainly use them up in future months, and you’ll have saved a few Rands too.
Think of joining supermarket loyalty programmes that give you special deals by swiping your card, if you haven’t joined these already.
Change the way you eat if necessary, by switching to whatever is in season and therefore cheaper. For example, if it’s tomato season and they’re going cheap, then buy a whole box and make soups, salads and sauces, some of which can be frozen for future meals.
Spice it up. Spices can make the plainest of foods tastier, and generally these are not overly expensive. Eat less meat, go for in-season veg and make curries and stews which are filling but still affordable to make.
Get medical aid that’s flexible
Unfortunately, in times like these items like short-term insurance and medical aid are often the sorts of expenses that people sacrifice to gain a few extra Rands per month.
But in the long term, giving up private medical aid cover can cost you more. The last few years have shown us that life is full of change – and if you or your dependents need urgent hospital treatment or are diagnosed with a serious illness, you don’t want to be without cover and have to foot the bills yourself. Having an extended break in your medical aid cover also means that you’ll pay higher rates for your medical aid, should you eventually re-join the scheme again.
Instead of giving up your medical aid, it’s better to switch to a provider that is more flexible and can help you weather the storm.
Fedhealth Principal Officer Jeremy Yatt says, “you shouldn’t have to put your health at risk because times are tough – rather switch to a provider that is innovating in order to support you”.
Seek help with debt
If your debts are spiralling out of control and you’re continuously borrowing more to be able to afford your lifestyle, your first step is to face the problem. Rather than ignore it, seek help from qualified debt counsellors who can address all your debts holistically.
They’ll contact your various credit providers, renegotiate payment plans with them, and get you on track to repay your debts in a way that’s manageable for you. Bear in mind that there are implications for applying for debt counselling, so it’s only advised under certain circumstances, but you could also get input from a financial advisor or debt expert who will assess your particular financial situation and guide you to a solution.
In times like these, we need to be proactive about our finances in order to weather the financial storm we’re facing. With these three tips, you can be well on your way to doing this as we navigate these extremely uncertain times.
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