This year’s holiday spending is expected to increase by 20% compared to the previous year, despite contractions in the household food basket due to high food prices.
According to Statistics SA’s mid-year population size estimates, this means that consumers are ready to pump R252 billion into the local economy.
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This is according to the summer spending survey conducted by the short-term lender Wonga.
The survey reveals that consumers are budgeting to spend an average of R6 326 above their usual monthly expenses during the holiday season, compared to R5 673 in 2020.
Of those surveyed, 41% said they are better off financially in this year’s season and only 23% say they are in the same financial situation as last year.
“Our survey revealed that 37% of people think they will spend more this holiday season than in 2020, despite the continued financial impact the Covid-19 pandemic has had,” says Bryan Smith, Wonga’s content manager.
“The expected increase in spending is generally significant and this year’s figures are encouraging, reflecting the upward trajectory of the economy,” he adds.
According to Sasfin Bank senior equity analyst Alec Abraham, the projection that consumers will spend more this year is only plausible in nominal terms.
“While employment has not recovered, several factors, such as the extension of the Social Distress Relief grant, a rebound [compared with 2020] on unsecured loans, higher prices and no retail restrictions, such as liquor sales, should support higher nominal total retail sales, ”he says.
However, Abraham adds that in terms of liquor sales, the expected rebound may change in December depending on the progression of the fourth wave.
Financing of purchases
To cope with the additional expense during this period, most of the people surveyed plan to draw from their year-end bonuses, use their savings, or rely on stokvels. Others plan to get a short-term loan, and fewer respondents say they will spend money on their credit cards to get through the holiday season.
The survey also reveals that the majority of South Africans plan to buy gifts this holiday season, with 77% of respondents planning to spoil their family, up from 75% seen in 2020 but down from 83% seen in 2019.
“Interestingly, 21% also plan to buy a gift this Christmas,” the survey report noted.
“At the top of 46% of people’s Christmas lists are money (same as last year) and gift vouchers (19%).”
As in 2020, 21% of respondents plan to do all of their purchases online, compared to 13% in 2019. This is due to the increase in e-commerce due to blocks and changes in shopping habits such as result of the pandemic.
Read: Make This A Season Of Holiday Cheer And Not A Holiday Scam
However, there is still a 2% increase in consumers preferring to buy in the store, although it has decreased since 2019 and is also down 11% compared to 2018. Other respondents intend to make their own gifts or buy gifts in the markets.
“This year has been a bit better for some people, however South Africans are more cautious when it comes to spending their money, especially in the wake of recent developments related to the new variant. [of Covid-19]”Smith says.
“Respondents gave 2021 a rating of five out of 10, compared to a score of three last year, and 61% of people say they are optimistic or excited about 2022,” he adds.
“The survey was conducted prior to the recent announcement of the discovery of the new Omicron variant [of Covid-19]. Unfortunately, this has dealt a blow to optimistic hopes that the local economy would enter 2022 on a firmer footing.
“We hope that the economy will prove resilient in the face of this new development and that South Africans can enjoy a safe and peaceful holiday season,” says Smith.
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Palesa Mofokeng is a Moneyweb intern.