Struggling consumers will face greater financial pressure after the South African Reserve Bank announced on 21 July that interest rates would increase by 75 basis points (bps), taking the repo rate to 5.5% and the prime lending rate to 9%.

The TransUnion Consumer Pulse Study for the second quarter of this year showed that 56% of consumers said they were likely to default on at least one of their bills and loans in the next three months.

More than half of the households surveyed (52%) said they would have to cut back on discretionary spending because of continued inflationary pressure.

Lee Naik, chief executive of TransUnion South Africa, said the ongoing rate hikes meant higher monthly repayments on debt obligations on top of sharply increased food and fuel prices, which combined to paint a worrying credit picture:

Although most consumers (93%) surveyed believe access to credit and lending products was important to achieve their financial goals, less than half (42%) reported they had sufficient access to credit.

More than half (51%) said they had considered applying for credit or for refinancing existing credit, but had decided not to.

Most consumers (89%) said monitoring credit was at least moderately important, with...