South Africans are anticipated to spend more than R284 billion this festive season according to the seventh annual Summer Spending Survey by short-term lender Wonga.
The data, collected from a record 13 775 consumers from across SA, indicates that individuals plan to each spend an average of R6 832, a significant increase from 2023’s spend of R5 707 and the highest figure reported since the survey was first conducted in 2018.
According to Chief Marketing Officer at Wonga, James Williams, the significant spike in festive season spending can be attributed to numerous factors including inflation as well as the recent interest rate cuts.
However, he says it is concerning that some have reported that they withdrew from their retirement savings to fund this, due to the introduction of the two-pot retirement system. Despite this, it is encouraging that 37% are choosing to spend less and save their money over the period.
2024’s statistics show that only 26% of South Africans have planned and saved throughout the year to cover their costs over the holiday period, down on 2023’s figure of 36% and considerably lower than the 42% who saved in 2019.
“When comparing data from our previous six surveys, it is concerning to see that this is the first time that we have seen the saving figure drop below the 30% mark,” he says. “This is however similar to the results from the recent findings of the Old Mutual Savings and Investment Monitor which reported that only three out of every ten working South Africans are prioritising putting money away for a vacation.”
The survey also revealed that 22% intend on using money invested in a stokvel to cover their extra festive season expenses. Notably, this figure has significantly decreased over 31% who did so in 2023, and it is the lowest percentage recorded since the initial survey in 2018.
On a positive note, there is less resilience on credit this year when compared to 2023. Although 20% of consumers are expecting to turn to credit providers to cover yearend, this is down from 24% in 2023.
“As seen in previous years, the percentage of monthly earnings versus festive spend declines through each income band, the lowest of which is for those earning R50 000 per month and above,” explains Williams. ”It is however concerning that that those earning R2 999 and less expect to spend an average of R3 200, which may result in many lower income earners having to turn to lenders to get through January.”
Like previous years, food and beverages will account for just over a third of festive season spend, with an average spend of R2 756 person. This is significantly higher than R1 907 spent in this category in 2023, which is indicative of the high inflation rates and subsequent dramatic rise in food and fuel prices this year.
Transport will make up 17% of the average festive budget, with most people travelling by car, or by bus and taxi. Interestingly, 10% plan to reach their destinations by plane, growing from the 4% seen in 2023 and just 3 percentage points below those who chose air travel in 2018.
Gifting makes up 14% of the expected budget, with money and shopping vouchers as top of the gift list. Holiday accommodation makes up almost 13% of the expenses for those choosing to spend their festive break away from home.
After plateauing last year, online shopping is no longer a favorite amongst South Africans with just under 18% choosing this once popular option. Over 70% indicated that they would prefer to shop instore this year, with others preferring markets or choosing to make their own gifts.
This trend could be driven by minimum spend requirements on online shopping platforms, pricy shipping or delivery fees, as well as complicated return policies. Some people are simply trying to avoid impulse buying or the feeling of being overwhelmed by the endless options offered online.
“Our key takeout this year is the impact of the high cost of food and essentials on consumers, as well as the numerous hikes in the price of fuel experienced in 2024,” notes Williams.
“Households have been under immense pressure over the past twelve months, receiving some respite towards the end of the year through a slowdown of CPI and interest rate cuts. Despite the challenges we have faced in 2024, over half of our survey respondents are excited and optimistic about the year ahead.”
