South African consumers are expected to become even more cautious about spending during the final quarter of the year after the South African Reserve Bank raised interest rates by 25 basis points, increasing borrowing costs for households already grappling with higher fuel and living expenses.
The rate increase comes just weeks before the Black Friday shopping period and the festive season, traditionally the busiest period for retailers and consumer-facing businesses.
Shift towards budgeting and cash-flow management
Dean Hyde, chief operating officer of buy-now-pay-later (BNPL) provider PayJustNow, said the latest increase is likely to sharpen consumers’ focus on budgeting and cash-flow management rather than curtail spending altogether.
“Consumers are not necessarily wanting to stop spending, but they are thinking much more carefully about how they pay and how a purchase fits into their broader monthly spending,” Hyde said in commentary issued following the decision.
Read more: Lower interest rates may boost economic growth: Minister Godongwana
SARB raises repo rate to 7.25% amid high inflation
According to PayJustNow, which serves approximately 4.5 million customers, transaction values reached a record high in July. The company said active customers used its BNPL service an average of just over five times during the past 12 months, while more than 98% of transaction value was repaid successfully.
The figures suggest that consumers continue to spend but are increasingly turning to alternative payment options to manage household budgets amid mounting financial pressure.
Cosatu condemns rate increase
The interest-rate increase has drawn criticism from organised labour, with the federation Congress of South African Trade Unions (Cosatu) warning that higher borrowing costs will further strain workers’ finances and dampen already weak economic growth.
In a statement, Cosatu said the increase would make home loans and other debt repayments more expensive for millions of consumers while reducing disposable income available for spending in the broader economy.
Workers facing mounting cost pressures
The labour federation argued that households are already battling a sharp rise in transport and energy costs following increases in fuel prices and electricity tariffs. It said many workers are increasingly dependent on credit to cover essential expenses such as food, transport and electricity.
Cosatu also contended that current inflationary pressures are largely driven by external factors linked to geopolitical conflict in the Middle East and higher global energy prices, rather than excessive domestic demand.
Concerns over economic growth
“The economy has been stagnant at around 1% growth for more than a decade,” the federation said, warning that higher interest rates could further undermine efforts to tackle South Africa’s unemployment crisis.
The union body called on the National Treasury to reconsider fuel-levy relief measures and urged the Reserve Bank to avoid additional rate increases until inflationary pressures linked to global energy markets ease.
Retailers brace for cautious shoppers
For retailers, the competing signals present a complex outlook heading into the year-end shopping season. While consumers continue to show willingness to spend, industry participants expect greater scrutiny of pricing, promotions and payment flexibility.
Hyde said the distinction between responsible spending and over-indebtedness would become increasingly important as households make purchasing decisions.
Planning takes centre stage
“As we move into Black Friday, the festive season and summer, consumers will still want to participate, but another rate increase makes planning even more important,” he said.
- South African consumers are expected to become even more cautious about spending during the final quarter of the year after the South African Reserve Bank raised interest rates by 25 basis points, increasing borrowing costs for households already grappling with higher fuel and living expenses.
- The rate increase comes just weeks before the Black Friday shopping period and the festive season, traditionally the busiest period for retailers and consumer-facing businesses.
- Shift towards budgeting and cash-flow management Dean Hyde, chief operating officer of buy-now-pay-later (BNPL) provider PayJustNow, said the latest increase is likely to sharpen consumers’ focus on budgeting and cash-flow management rather than curtail spending altogether.
- “Consumers are not necessarily wanting to stop spending, but they are thinking much more carefully about how they pay and how a purchase fits into their broader monthly spending,” Hyde said in commentary issued following the decision.
- Read more: Lower interest rates may boost economic growth: Minister Godongwana SARB raises repo rate to 7.25% amid high inflation According to PayJustNow, which serves approximately 4.5 million customers, transaction values reached a record high in July.
South African consumers are expected to become even more cautious about spending during the final quarter of the year after the South African Reserve Bank raised interest rates by 25 basis points, increasing borrowing costs for households already grappling with higher fuel and living expenses.
The rate increase comes just weeks before the Black Friday shopping period and the festive season, traditionally the busiest period for retailers and consumer-facing businesses.
Dean Hyde, chief operating officer of buy-now-pay-later (BNPL) provider PayJustNow, said the latest increase is likely to sharpen consumers' focus on budgeting and cash-flow management rather than curtail spending altogether.
"Consumers are not necessarily wanting to stop spending, but they are thinking much more carefully about how they pay and how a purchase fits into their broader monthly spending," Hyde said in commentary issued following the decision.
Read more: Lower interest rates may boost economic growth: Minister Godongwana
SARB raises repo rate to 7.25% amid high inflation
According to PayJustNow, which serves approximately 4.5 million customers, transaction values reached a record high in July. The company said active customers used its BNPL service an average of just over five times during the past 12 months, while more than 98% of transaction value was repaid successfully.
The figures suggest that consumers continue to spend but are increasingly turning to alternative payment options to manage household budgets amid mounting financial pressure.
The interest-rate increase has drawn criticism from organised labour, with the federation Congress of South African Trade Unions (Cosatu) warning that higher borrowing costs will further strain workers' finances and dampen already weak economic growth.
In a statement, Cosatu said the increase would make home loans and other debt repayments more expensive for millions of consumers while reducing disposable income available for spending in the broader economy.
The labour federation argued that households are already battling a sharp rise in transport and energy costs following increases in fuel prices and electricity tariffs. It said many workers are increasingly dependent on credit to cover essential expenses such as food, transport and electricity.
Cosatu also contended that current inflationary pressures are largely driven by external factors linked to geopolitical conflict in the Middle East and higher global energy prices, rather than excessive domestic demand.
"The economy has been stagnant at around 1% growth for more than a decade," the federation said, warning that higher interest rates could further undermine efforts to tackle South Africa's unemployment crisis.
The union body called on the National Treasury to reconsider fuel-levy relief measures and urged the Reserve Bank to avoid additional rate increases until inflationary pressures linked to global energy markets ease.
For retailers, the competing signals present a complex outlook heading into the year-end shopping season. While consumers continue to show willingness to spend, industry participants expect greater scrutiny of pricing, promotions and payment flexibility.
Hyde said the distinction between responsible spending and over-indebtedness would become increasingly important as households make purchasing decisions.
"As we move into Black Friday, the festive season and summer, consumers will still want to participate, but another rate increase makes planning even more important," he said.
