Consumers showing restraint: Reserve Bank
Household savings have remained flat at 1,5 percent of earnings while "tentative signs of restraint are evident" in spending, the Reserve Bank's latest quarterly bulletin released yesterday said.
Household savings have remained at about the same level this year, while corporate and government savings have deteriorated. SA's overall savings have weakened to 13,75 percent of gross domestic product in the third quarter from 15,25 percent in the second quarter.
Meanwhile, higher interest rates have seen household debt servicing costs rise to 10,25 percent of disposable income from 9,5 percent in the second quarter.
Household indebtedness hit a new record of 77,5 percent of household disposable income in the third quarter compared with a revised rate of 76 percent in the second quarter.
"Higher mortgage interest rates probably contributed to a slowdown in the pace of fixed property price increases during the first 10 months of 2007. The SA consumer's net worth nevertheless continued to benefit from the appreciation of in-house prices," the report said.
Data showed higher interest rates hit households harder than corporations.
"One of the key inflation risks identified in previous meetings has been the strong growth of household consumption expenditure. Recently there has been evidence of moderation. After increasing at an annual rate of 7,4 percent in the first quarter of 2007, household consumption expenditure increased at a rate of 5,5 percent in the second quarter. This was the lowest quarterly increase since the second quarter of 2003."