The average SA salary performed better in July, providing welcome relief for SA income earners despite low economic growth prospects, an index shows.
The latest BankservAfrica take-home pay index for July released on Wednesday shows average nominal take-home pay in July was R15,503, higher than the R14,169 in June and R14,509 in July 2022, reflecting slightly stronger purchasing power supported by a moderation in inflation.
Independent economist Elize Kruger said that while this was the first glimmer of hope in a while, the moderation in consumer inflation might not be sustainable as renewed pressure on fuel prices had reared its head again.
Kruger said the moderation in inflation from 7.1% year on year in March to 5.4% in June, which helped reduce the erosion of households’ purchasing power, may be short-lived as sizeable fuel increases in September could push headline inflation again towards 6%.
“This and the recent depreciation of the rand exchange rate will also add to the cost of imported products, pushing inflation higher,” Kruger said. “These developments [could force] the SA Reserve Bank to hike interest rates at the next MPC meeting in September.”
She said while the interest rate cycle should be close to a plateau, the Reserve Bank would, in all probability, be uncomfortable with the renewed rand depreciation and upward pressure on transport inflation — and could potentially pull the trigger again on interest rates.
BankservAfrica’s head of stakeholder engagements, Shergeran Naidoo, said that with household finances already under severe pressure, further rate increases would be very negative for the spending ability of consumers.
Naidoo added that data already reflected by DebtBusters shows how financial stress affects other aspects of South Africans’ lives. The findings showed that respondents who were stressed about money had increased from 70% in 2022 to 78% in 2023.
Naidoo said even though 63,000 more salaries were paid in July 2023, these were not enough to offset the previous month’s losses.
“Many challenges remain with economic activity still dampened by the ongoing load-shedding (though some moderation is evident in stages that apply), elevated interest rates, a lacklustre job market and low confidence levels,” Naidoo said.
He said there was little indication the second half of 2023 would be significantly different to the first half, and the job market was likely to remain lacklustre for the remainder of the year.
The data also showed that aggregate private pensions also increased further in July. The BankservAfrica Private Pensions Index ticked up further in both nominal and real terms during July, continuing its solid performance.
The data shows that the nominal average private pension increased to R10,943 in July compared to the previous month’s R10,776, 7.5% higher than one year earlier and the highest monthly payment so far in 2023.
In real terms, the average real private pension in July 2023 came to R9,971, 2.3% higher compared to a year earlier.
“These developments suggest private pensions have held up well despite the rising inflation,” Naidoo said.
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