South African households see slight income improvement, but challenges remain

THE financial position of South African households improved slightly in the fourth quarter, but real disposable income per person for 2024 continued its decline from 2022, when the interest rate raising cycle increased.

- EDWARD WEST

This was according to economist Dr Roelf Botha, who commented on the release on Tuesday of the Altron FinTech Household Resilience Index (AFHRI) for the fourth quarter of 2024.

He attributed the modest improvement to three 25 basis point cuts in the repo rate between September 2024 and January 2025, which lowered the prime overdraft rate to 11% from a record high of 11.75%. Consumers also benefited from year-end bonuses, two-pot pension payouts, and temporary jobs in the holiday period, particularly in the tourism and retail sectors.

"The data clearly shows that while we're seeing some recovery, households remain under significant financial strain following this period of high interest rates. The marginal interest-rate cuts provided some small relief, but more substantial monetary policy easing is required to meaningfully improve household financial resilience, especially in the face of the diminished global growth figures anticipated this year," said Altron FinTech MD Johan Gellatly.