Consumers spend more on booze than medicine
Fin24.com - Sep 19th 2013, 09:31
Cape Town - South Africans spend almost four times more on alcohol and cigarettes than on medical expenses and over one and a half times more on clothes than on education, a new study has revealed.
According to analytics consultancy Eighty20, which recently analysed South Africans' spending habits using Stats SA’s latest income and expenditure survey, consumers also spend about the same on paid-for satellite subscriptions than on retirement annuities.
Illana Melzer, head of Eighty20, said they've analysed the Stats SA survey to examine expenditure patterns and identify the key drivers of SA consumption habits.
A key factor shaping consumption patterns is access to credit.
She said people would rather spend money on clothes than buy a house.
Of the 18 million consumers having open credit accounts, 11 million have a clothing credit account. In contrast 2.4 million have a mortgage.
"In 2008 mortgages accounted for 47% of all credit granted. They now account for about a quarter, evidence that the credit market has clearly shifted," she said.
She said that, because mortgage finance is not easily available, households prioritise other expenditure above investment in housing.
Another key factor driving expenditure is access to housing, she said, adding that compared with 2001, 3.5 million more households are now living in proper housing, largely because of the state’s housing delivery programme.
According to Melzer, government’s primary subsidy targets households earning less than R3 500 per month and this subsidy value has increased significantly as the minimum housing specifications has improved.
“Beyond this, the government’s range of free services offered to lower income households also includes education, public health, and free rates and services – which all create extra discretionary income to spend on other products and services provided by the private sector.”
She also pointed out that the gap between rich and poor is shrinking, primarily because of service delivery.
"In 2012 roughly 28% of all South Africans were in LSMs one to four. In 2004 this was almost 50%."
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