Credit card put away as tough times loom

South Africans did not close their eyes and swipe their cards for Christmas as readily as in 2012, more than one set of numbers released yesterday showed.

"BankservAfrica data show that the average shopping trolley cost just over R400 in December, up by only 1.6% on the previous year," said economist Mike Schussler.

BankservAfrica handles card payments.

"This clearly indicates a cut-back because this is about 4% below the inflation rate.

"Many department stores had a hard time with clothing, books and music sales, which all grew but with average transaction values below the inflation rate," he said.

TransUnion's Consumer Credit Index showed yesterday that household cash flow improved slightly in the last three months of last year as price inflation for some of the most important expensive items declined.

The credit provider said, however, that "risks to household living costs in 2014 still appear considerable due to rand weakness and inflation pressures".

Apart from the higher fuel price, which the Department of Energy is expected to raise by as much as 30c a litre again, consumers have not really felt the effects of the weaker rand.

TransUnion said that this was not necessarily good news because it meant that companies were absorbing the rising costs and could resort to either freezing salaries or retrenching staff.

Reserve Bank data released yesterday show that the pace of credit growth has slowed.

First National Bank household and property analyst John Loos said yesterday that the further slowing in the pace of growth of household sector credit to 5.5% year-on-year, from the previous month's 5.9%, was not surprising.

"Much of this slowing has to do with a prior pullback in unsecured lending growth, coupled to banks' mortgage books still growing at a pedestrian pace," he said.

Loos sees this as positive for the financial health of households, given the Reserve Bank's decision to raise interest rates by half a percentage point earlier this week.

"[Household sector credit] growth has slowed all the way from a peak of 10.4% in November 2012, and was responsible for the slight decline in the household debt-to-disposable income ratio in the third quarter of 2013 to 75.5%, from a previous quarter's 75.8%," Loos said.