Household expenditure rises in fourth quarter

Tuesday, March 23, 2010

Pretoria - Household expenditure in the last quarter of 2009 rose by 1.4 percent, said the Reserve Bank.

In its March Quarterly Bulletin released on Tuesday, the central bank said that real final consumption expenditure by households increased following on contraction rate of between 1.5 and 5.8 percent for five consecutive quarters.

"The higher consumer spending in the final quarter resulted primarily from rising spending on durable goods. On an annual basis, however, real final consumption expenditure by households contracted by 3.1 percent in 2009 compared with an increase of 2.4 percent in 2008; this was the first annual contraction in real spending since 1992," said the bank.

Growth in real outlays on durable goods grew from 0.7 percent in the third quarter of 2009 to 15.2 percent in the fourth quarter. It said that the strong increase in mostly discretionary spending was mainly confined to the buying of new cars and durable recreational and entertainment goods like television sets and mobile phones.

It said that relatively favourable interest rates alongside attractive promotions by various vehicle franchises boosted sales in personal transport equipment and that real outlays on durable goods were probably also encouraged by the extension of the replacement cycle during the recessionary phase in the domestic economy.

"However, for 2009 as a whole, real expenditure on durable goods contracted by 11.3 percent following a contraction of 7.1 percent in 2008," said the bank.

When coming to semi-durable goods, this contracted by 4.8 percent and 7.2 percent respectively in the second and third quarter of 2009 before contracting at an annualized rate of 0,6 percent in the fourth quarter," it said.

It said that real expenditure on semi-durable goods declined by 1.5 percent in 2009 following an increase of 4,2 per cent in 2008.

Real expenditure on non-durable goods contracted at an annualised rate of 5.4 percent in the third quarter of 2009 before moderating to a decline of 0.7 percent in the fourth quarter. It said that this was as a 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.

Real consumer expenditure on services increased at an annualised rate of 1.1 percent in the fourth quarter of 2009, moderately slower than the increase of 2 percent recorded in the third quarter.

"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," said the Reserve Bank.