Household spending increases

2010-03-23 13:33

HOUSEHOLD spending increased in the fourth quarter of 2009, the SA

Reserve Bank said in its March Quarterly Bulletin released today.

Having contracted at rates ranging between 1.5% and 5.8% for five

consecutive quarters since the third quarter of 2008, real final consumption

expenditure by households reversed course and increased at an annualised rate of

1.4% in the fourth quarter of last year.

“The higher consumer spending in the final quarter resulted

primarily from rising spending on durable goods,” the bank said.

On an annual basis, however, real final consumer expenditure by

households contracted by 3.1% in 2009 compared with an increase of 2.4% in


“This was the first annual contraction in real spending since

1992,” the bank said.

Growth in real outlays on durable goods accelerated from 0.7% in

the third quarter of last year to 15.2% in the fourth quarter.

“The strong increase in mostly discretionary spending was mainly

confined to the purchases of new motor cars and durable recreational and

entertainment goods such as TVs, computers and cellphones,” the bank said.

It said relatively favourable interest rates alongside attractive

promotions by various vehicle franchises boosted sales in personal transport

equipment while the moderation in prices of recreational durable goods prompted

consumers to buy these products.

“Real outlays on durable goods were probably also encouraged by the

extension of the replacement cycle during the recessionary phase in the domestic

economy,” the bank said.

However, for last year as a whole, real expenditure on durable

goods contracted by 11.3% following a contraction of 7.1% in 2008.

According to the bank, expenditure on semi-durable goods contracted

by 4.8% and 7.2% respectively in the second and third quarter of 2009 before

contracting at an annualised rate of 0.6% in the fourth quarter.

“Increased outlays on clothing and footwear and household textiles,

furnishings and glassware partly neutralised the contraction in spending on the

remaining goods categorised under demi-durable goods,” the bank said.

Real expenditure on semi-durable goods declined by 1.5% last year

following an increase of 4.2% in 2008.

The bank said real expenditure on non-durable goods contracted at

an annualised rate of 5.4% in the third quarter of 2009 before moderating to a

decline of 0.7% in the fourth quarter.

This was the net result of increased spending on household consumer

goods, which was partly neutralised by lower spending on food, beverages and

tobacco and a moderation in spending on medical and pharmaceutical goods.

The bank said for last year as a whole, real spending on

non-durable goods fell at a rate of 4.4% compared with an increase of 1.5% in

2008 “showing the extent to which consumers were pressured throughout 2009 to

rein in and change their consumption habits in favour of more affordable


Real consumer spending on services rose at an annualised rate of

1.1% in the fourth quarter of 2009, slower than the increase of 2% recorded in

the third quarter.

The bank said that for the calendar year 2009 real outlays on

services declined marginally by 0.6%.

“This was the first annual decline since 1985 and only the second

decline recorded since 1946, thereby reflecting some degree of prolonged

pressure on the consumer.”

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