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Consumer Expenditure Trends
Consumer Trends
Zaakirah Ismail*
Siphamandla Mkhwanazi*
Kim Silberman*
17 May 2016
Expenditure Trends: Executive summary
This research analyses SA households’ expenditure patterns.
We divide household income into three broad annual (monthly) income categories: Low Income, Middle Income, and Upper Income. We further
segment these groups as outlined below.
Low Income
R0 - R19,000 (R0 - R1,583): Lowest income group
R19,001 - R86,000 (R1,584 - R7,167): Second lowest income group
Middle Income
R86,001 – R197,000 (R7,168 – R16,417): Low emerging middle
R197,001 - R400,000 (R16,418 - R33,333): Emerging middle
R400,001 - R688,000 (R33,334 - R57,333): Lower middle
R688,001 - R1,481,000 (R57,334 - R123,417): Upper middle
Upper income
R1,481,001 - R2,360,000 (R123,418 - R196,667): Emerging affluent
R2,360,001+ (R196,668+): Affluent earning
We use data including survey data from the Bureau of Market Research (BMR).
Source : BMR, (2015) Standard Bank Research
Expenditure Trends: Executive summary (continued…)
Section 1: Headwinds facing the South African consumer: We present macroeconomic forecasts for 2016. Our forecasts include:
GDP: 0.6% y/y
Inflation: 6.6% y/y
USDZAR: R15.63
Current account deficit average: 4.3% of GDP
Repo rate (end of period): 7.5%
PCE: 0.6% y/y
Section 2: Household Income and Expenditure:
When define the household income brackets and unpack the number of households in each income bracket and their main income sources.
We find that:
62.3% of households fall within the poorest income bracket (Below R86,000 per annum).
Households are predominantly dependent on salaries and wages as their main source of income (64%).
24% of households rely on the government for income.
We also look at aggregate household expenditure. These expenditure items include:
Contributions i.e. installment type payments e.g. insurance, medical aid, pension fund contributions
Expenditure by purpose
Expenditure by function and
Essential vs. non-essential spend
Source: BMR, (2015) Standard Bank Research
Expenditure Trends: Executive summary (continued…)
We find that:
• Non-Durables comprises 44% of expenditure, services 37%, durables 9.5% and semi-durables 9% of household expenditure.
• 60% of household spending is on essential items and 40% on non-essential items.
• The largest components of household expenditure are food, beverages and tobacco (20%) and contributions, which refers to instalment type
payments and includes medical aid, insurance and pension fund contributions (29%).
• Transport comprises 15% of aggregate household expenditure. This includes petrol and purchases of new vehicles.
• Health accounts for 6% and Housing, electricity, gas and fuels for 5% of aggregate household spending.
• Education is only 3% of spending. This includes primary, secondary and tertiary education. Unfortunately the data is too aggregated to differentiate
education expenditure.
Section 3: Expenditure patterns per income group: We categorize expenditure per income group according to durable, non-durable, semi-durable
goods and services. We also focus on specific household items that comprise a large percentage of spending within each of the household income
brackets.
We find that:
As much as 59% of expenditure by low income households is on non-durable goods, primarily food, making these households more susceptible to
food inflation. 8.8% of spending is on semi-durable goods and only 3.5% of low income household expenditure is on durable goods.
Between 22% and 40% of spending by middle income households is on non-durable goods and between 5% and 10% on durable goods.
15-23% of spending by high income households is on durable goods, making these households more sensitive to currency weakness and interest
rate hikes. 19% of high income household spending is on non-durables
Spending on services tends to comprise a similar percentage of each household budget i.e. between 25% and 33% of household spending.
Spending on semi-durables accounts for almost 9% of household spending in lower income groups and only 4.5% of spending by affluent
households.
Source all charts: BMR, (2015) Standard Bank Research
Expenditure Trends: Executive summary (continued…)
Section 4: The consumer basket per income group: We analyse each household income bracket’s consumption basket and implied trade-offs
faced by each household income segment. This allows us to begin to identify potential stress levels, given the 2016 macroeconomic headwinds
(Section 1). According to BMR the following items make up a typical households’ consumption basket:
Clothing & footwear
Communication
Education
Food
Beverages & tobacco
Furniture
Household equipment & routine maintenance
Health
Hotels; cafes & restaurants
Rent
Electricity & Gas
Housing; water; electricity; gas & other fuels
Miscellaneous goods & services
Recreation; entertainment & culture
Petrol
Transport
Contributions
.
Source: BMR, (2015) Standard Bank Research
Expenditure Trends: Executive summary (continued…)
We find that:
Low income groups (R0 – R86,000 per annum):
• Allocate large percentage's of their budgets to food (29%-34%), exposing them to high levels of food inflation.
• Transport expenditure is the second dominant item in the basket. It comprises between 11%-12% of this groups budget. This group will be
relatively more affected by oil price and fuel levy increases, and currency weakness.
• On average, very little is spent on education (1.5%).
• Contribution expenditure is also low (less than 1%). This means that some of these households might not have access to medical aid, insurance or
a private pension.
Middle income groups (R86,001- R1,481,000 per annum):
• Allocate 7%-18% of their budgets to food. This is at least 10% lower than the low income group. There is an exposure to high food inflation but not
as much as the two low income groups.
• Transport expenditure comprises between 15%-19% of this groups budget. Therefore this group will also be affected mostly by an increase in the
fuel levy, and currency weakness.
• On average, this group spends between 2%-4% on education. This is significantly higher than the low income group.
• Expenditure on contributions is also higher for this group compared to the low income group. This means that these households have better
access to medical aid and insurance. Total contributions expenditure is between 16% and 30% for these households.
Upper income groups (R1,481,001 - R2,360,001+ per annum):
• Largest spend is on transport (30.1%). This include the purchases of new vehicles. This could also highlight access to more expensive modes of
transport such as airlines, because of affordability. If one excludes petrol, transport expenditure increases the further one climbs up the income
brackets.
• Health expenditure is 6.7% of budget. The higher allocation to health highlights the fact that a higher income earners can prioritize health. If the
proposed tariff on pharmaceutical products is approved this would have a relatively bigger affect on upper income groups.
• Housing, water, electricity and gas make up 4.3% of the upper income budget. Furniture and household equipment purchases are also quite strong
in this category at close to 6%.
• There is an 8.8% budget allocation to recreational activities. This is the highest of any income group.
Source : BMR, (2015) Standard Bank Research
7
Private consumption expenditure (PCE) forecast to slow to 0.6% y/y in 2016
Source: SBGS analysis
GDP Growth outlook
0.6% 2016
CPI Inflation
forecast 6.6% 2016
Repo Rate hikes
We expect a further
50bps in 2016 and for
repo to end the year
at 7.50%
Flat to slightly
negative real
wages
Job shedding and slow
employment creation
Household
deleveraging
Food inflation
forecast to average
10.2% in 2016
Fuel levy: 30c/l April 2016
Electricity: 9.4% hike June 2016
Water inflation of 10% expected
Weaker rand due to
commodity prices
More moderate wealth
effects than in 2015
(share and house price
returns)
8 Macroeconomic forecasts
Growth outlook for 2016 is 0.6%, in part due to the effect of the drought which is expected to shave 0.4ppts off growth and
in part due to tighter financial conditions, especially for consumers. If the drought dissipates, which we expect, GDP growth
should recover to 1.2% in 2017.
The drought will have similarly negative implications for inflation and the current account deficit.
Our inflation forecast for 2016 is 6.6%. Our forecast assumes oil averages USD40.0/bbl and the USDZAR averages 15.63.
We expect nominal private sector wage inflation of around 6.5%, such that real wages are flat the marginally negative in
2016.
SA’s current account deficit (CAD) is forecast to average 4% of GDP in 2016. Weak foreign demand will restrain export
volumes, but weak domestic demand will hopefully act to reduce imports, facilitating some narrowing of the CAD (current
account deficit).
Standard Bank’s Base case is for the repo rate to rise by a total of 125 bps in 2016; an extra 50 bps still expected. SA
policymakers would need to be aggressive and proactive to prevent a downgrade to below investment grade on 3 June when
S&P sits once again to review the country’s sovereign rating.
USDZAR: Tactically, we continue to see rand weakness into June, but doubt at this point that the rand would move
substantially weaker than 15.50. Spikes toward 16.00 in our view would be short-lived (bar any political surprises which may
damage the credibility of National Treasury and the perceived willingness to maintain fiscal discipline).
Furthermore, a less hawkish US Fed and, by implication, a more benign emerging market environment, has reduced the
likelihood of the rand sliding as it did over December and January. Towards year-end, we see the rand strengthening again,
driven predominantly by higher domestic interest rates and current account compression. We see the USDZAR reaching
R15.00 for 2017.
*Please see “SBR’s Consumer trends: consumer outlook 2016” for a more extensive view on macroeconomic headwinds.
Source: SBGS analysis
10 Introduction
1) We unpack the number of households in each income bracket and the main income sources of households.
We find that:
62.3% of households fall within the poorest income bracket (Below R86,000 per annum).
Households are predominantly dependent on salaries and wages as their main source of income (64%).
24% of households rely on the government for income.
2) We also look at aggregate household expenditure patterns. These expenditure items include:
Contributions i.e. installment type payments e.g. insurance, medical aid, pension fund contributions
Expenditure by purpose and function
Essential vs. non-essential spend
We find that:
• Non-Durables comprises 44% of expenditure, services 37%, durables 9.5% and semi-durables 9% of household expenditure.
• 60% of household spending is on essential items and 40% on non-essential items.
• The largest components of household expenditure are food, beverages and tobacco (20%) and contributions, which refers to
instalment type payments and includes medical aid, insurance and pension fund contributions (29%).
• Transport comprises 15% of aggregate household expenditure. This includes petrol and purchases of new vehicles.
• Health accounts for 6% and Housing, electricity, gas and fuels for 5% of aggregate household spending.
• Education is only 3% of spending. This includes primary, secondary and tertiary education. Unfortunately the data is too aggregated to
differentiate education expenditure.
Source: BMR, (2015) Standard Bank Research
11
BMR household income classifications
– These income brackets differ from the personal
income brackets used in Section 2. We call these
“household income brackets”.
– Household income brackets are higher than
personal income brackets, as it is assumed that
there are more income earners present in one
particular household.
There are currently eight income group classifications:
– R0 - R19,000 (R0 - R1,583)
► Lowest income group (Poor)
– R19,001 - R86,000 (R1,584 - R7,167)
► Second-lowest income group (Poor)
– R86,001 - R197,000 (R7,168 - R16,417)
► Low emerging middle
– R197,001 - R400,000 (R16,418 - R33,333)
► Emerging middle
– R400,001 - R688,000 (R33,334 - R57,333)
► Lower middle
– R688,001 - R1,481,000 (R57,334 - R123,417)
► Upper middle
– R1,481,001 - R2,360,000 (R123,418 - R196,667)
► Upper income/Emerging affluent
– R2,360,001+ (R196,668+)
► Affluent earning
Annual (monthly) income classification of households
Source: BMR, (2015) Standard Bank Research
12
BMR 2015 Household Income
Key points
Source all charts: BMR, (2015), Standard Bank Research
The slope of the Engel curve indicates the extent to
which each income bracket’s purchasing power
increases.
The slope steepens between the middle and the upper
income groups indicating the extent to which
purchasing power increases per rand of income
generated, once households move into the upper
income group.
South African households predominantly fall into the
poorest category (18.2%) and the second-poorest
category (44.1%). These two groups make up more
than half of South African households: a combined
figure of 62.3%.
The middle income groups comprise a combined 26.4%
of South African households.
The wealthiest households in South Africa only account
for 1.2%.
BMR % no. of households
2015 Engel curve
0
100
200
300
400
500
600
700
800
900
Ave
rag
e ex
pen
dit
ure
(R
and
s 0
00
’s)
18.2
44.1
16.3
10.1 5.9 4.3
0.8 0.4
-5
5
15
25
35
45
%
13 BMR 2015 Household income
Source of all tables: BMR, (2015) Standard Bank Research
BMR Analysis %
Salaries & Wages 64.23
Grants 17.30
Other transfers 6.48
Net profit 6.16
Pensions & Annuities 4.92
Investments 0.90
Total 100.00
The largest source of income for households is income
from salaries and wages (64%).
This emphasizes the reliance on a healthy labour
market.
Main sources of household income
14
Total expenditure components
Contributions include the following items:
– Contributions to long-term insurers
– Current taxes on income and wealth (note: not
personal income taxes)
– Medical aid contributions
– Miscellaneous transfers paid
– Pension fund contributions
– Short-term insurance
Consumption includes expenditure on the following
household items:
– Clothing & footwear
– Communication
– Education
– Food
– Beverages & tobacco
– Furniture
– Household equipment & routine maintenance
– Health
– Hotels; cafes & restaurants
– Rent
– Electricity & gas
– Housing; water; electricity; gas & other fuels
– Miscellaneous goods & services
– Recreation; entertainment & culture
– Petrol
– Transport
Source: BMR, (2015)
15
BMR household expenditure 2015
Key points
This represents
expenditure of all
households at an
aggregate level.
The largest
component of
expenditure of
households is food
(20%), followed by
Contributions (29%).
Transport
comprises 15%; this
includes petrol and
purchasing of new
vehicles, health 6%
and housing,
electricity, gas and
fuels is 5%;
education is only
3%.
Source all charts: BMR, (2015), Standard Bank Research
Household expenditure patterns 2015
Clothing & footwear 4%
Communication 2% Education
3%
Food; beverages & tobacco 20%
Furnishings; HH equipment & routine maintenance
5% Health
6%
Hotels; cafes & restaurants 2%
Housing; water; electricity; gas & other fuels
5%
Misc goods & services
6%
Recreation; entertainment &
culture 3%
Transport 15%
Contributions 29%
16 Contributions
List of Items Total
R/bn
Current taxes on income & wealth 400.27
Long Term Insurers pension & group life business 152.85
Long Term Insurers Retirement Annuities 84.49
Medical contributions by employer in private institution 39.63
Medical contributions by household member in private institution 78.47
Miscellaneous current transfers 6.25
Pension fund employees contributions : Official pension funds 23.76
Pension fund employees contributions : Official pension funds unanswered 0.81
Pension fund employees contributions : Private pension funds 28.88
Pension fund employees contributions : Private pension funds unanswered 0.98
Pension fund employers contributions : Official pension funds 35.30
Pension fund employers contributions : Official pension funds unanswered 0.37
Pension fund employers contributions : Private pension funds 30.86
Pension fund employers contributions : Private pension funds unanswered 0.32
Short term insurance 35.36
Social security paid 6.61
Grand total 925.21
Key points
The largest
contributions made
by households are
in the form of taxes.
Thereafter, the
second-largest is
insurance and the
medical aid sectors.
Source of all tables: BMR, (2015) Standard Bank Research
17 Expenditure by purpose and function
Expenditure by purpose Annual Value
R/bn
Hotels; cafes & restaurants 63.22
Communication 65.60
Education 78.45
Recreation; entertainment & culture 103.81
Clothing & footwear 121.22
Furnishings; HH equipment & routine maintenance 142.89
Housing; water; electricity; gas & other fuels 169.96
Health 193.39
Misc goods & services 197.79
Transport 463.13
Food; beverages & tobacco 627.03
Grand Total 2226.47
Total expenditure
amounts to
R2226.47bn.
Non-Durables is the
largest contributor
(44%). Services is
37% and Durables is
9.5%.
Source of all tables: BMR, (2015) Standard Bank Research
Expenditure by Function Annual Value %
Durable goods 211.96 9.52
Non-durable goods 984.62 44.22
Semi-durable goods 196.94 8.85
Services 832.95 37.41
Grand Total 2226.47 100
Key points
18 List of essentials & non-essential items
List of Items Essential
R/bn
Non- essential
R/bn
Total
R/bn
Clothing & footwear 120.07 1.15 121.22
Communication 65.06 0.54 65.60
Education 78.45 - 78.45
Food; beverages & tobacco 448.85 178.18 627.03
Furnishings; HH equipment & routine maintenance 60.18 82.70 142.89
Health 187.73 5.66 193.39
Hotels; cafes & restaurants - 63.22 63.22
Housing; water; electricity; gas & other fuels 140.42 29.54 169.96
Miscellaneous goods & services 8.01 189.78 197.79
Recreation; entertainment & culture - 103.81 103.81
Transport 226.91 236.22 463.13
Total 1335.68 890.80 2226.47
Key points
Within durable
goods, transport
makes up close to
70% of expenditure.
It also makes up the
largest component
of services at 22% of
expenditure.
Semi-durable
expenditure is
dominated by
clothing and
footwear (62%).
Lastly, food,
beverages, &
tobacco comprises
63.7% of non-
durable expenditure.
Source of all tables: BMR, (2015) Standard Bank Research
20 Introduction
We categorize expenditure into durable, non-durable, semi-durable goods and services. We also focus on specific household
items that comprise a large percentage of spending within each of the household income brackets.
We find that:
As much as 59% of expenditure by low income households is on non-durable goods, primarily food, making these households
more susceptible to food inflation. 8.8% of spending is on semi-durable goods and only 3.5% of low income household
expenditure is on durable goods.
Between 22% and 40% of spending by middle income households is on non-durable goods and 5% and 10% on durable goods
15-23% of spending by high income households is on durable goods, making these households more sensitive to currency
weakness and interest rate hikes. 19% of high income household spending is on non-durables
Spending on services tends to comprise a similar percentage of each household budget i.e. between 25% and 33% of household
spending.
Spending on semi-durables accounts for almost 9% of household spending in lower income groups and 4.5% of spending by
affluent households.
Source of all tables: SBG Research analysis
21 BMR expenditure analysis 2015 per household Expenditure on durable goods (% of total expenditure
per income group Key points
Expenditure on
durables increase as
income increases.
Higher income
households will be
hit harder by
currency weakness
and interest rate
hikes.
Expenditure on non-
durables decreases
as a percentage of
total, as income
increases. Food
inflation will affect
the poorest groups
the most.
Services comprises
a larger percentage
of the middle
income group’s
budget.
Semi-durables
comprises twice the
budget for lower
income groups
(8.8%) versus the
highest income
(4.4%) group.
Source all charts: BMR, (2015), Standard Bank Research
Expenditure on non- durable goods (% of total
expenditure per income group
Expenditure on semi- durable goods (% of total
expenditure per income group
Expenditure on services (% of total expenditure per
income group
3.4 3.6 5.4
7.0
9.8 10.1
15.8
23.5
0
5
10
15
20
25
%
58.9
52.3
40.5
32.6 26.5
22.2 20.5 18.9
0
10
20
30
40
50
60
70
%
8.7 8.8 8.2
6.9 6.4
5.4 5.9
4.4
0
1
2
3
4
5
6
7
8
9
10
%
26.2 29.0
30.6 31.2 30.5 31.8
33.1
25.7
0
5
10
15
20
25
30
35
%
22
BMR expenditure analysis 2015 per household Key points
Each bar represents
the % allocation of a
household’s income
to expenditure of the
item in question.
Also note, this is the
average expenditure
per household
within a particular
income category.
Source all charts: BMR, (2015), Standard Bank Research
Clothing and footwear
On average, households allocate around 6.1% of their
budgets to housing, water, electricity gas and other
fuels.
Electricity tariffs for 2016 (9.4%) and expected hikes in
2017 (13%) will significantly impact all households.
Poorer households allocate more than twice what a
richer household allocates towards clothing and
footwear.
As income of the household increases, the allocation of
households income to clothing and footwear decreases.
Effects of a pull-back of credit extended by retailers will
affect poorer households.
Housing, water, electricity, gas and other fuels
6.2 6.3
5.4
4.1
3.5
2.7 2.6
1.9
1
2
3
4
5
6
7
%
7.5
6.5 6.2
6.5
6.1
5.3
6.2
4.3
4
4.5
5
5.5
6
6.5
7
7.5
8
%
23
BMR expenditure analysis 2015 per household Education Key points
Each bar represents
the % allocation of a
household’s income
to expenditure of the
item in question.
Also note, this is the
average expenditure
per household
within a particular
income category
Wealthier
households allocate
a larger percentage
of their budget to
health. The upper
middle income
group allocates the
most at 9.5%.
Proposed
pharmaceutical
hikes would have a
relatively bigger
impact on the
middle income
group
Source all charts: BMR, (2015), Standard Bank Research
Health
Richer households have greater access to educational
institutions than poorer households.
Poorer households cannot afford higher budgets for
education because of competing needs.
The middle class allocates the largest percentage of
their budgets towards education. This is an average of
3.4%.
The lowest two income groups allocate an average of
1.5% and the highest two income groups allocate an
average of 2.8%.
Medical aid
1.5 1.5
2.4
3.2
3.9 4
3.3
2.2
1
1.5
2
2.5
3
3.5
4
4.5
5
%
5.3 5.5
6.3
7.1 7.5
9.5
7.7
6.7
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
%
0.1 0.6
2.4
5.6
7.2 7.5
5.5 5.4
-1
0
1
2
3
4
5
6
7
8
9
%
24
BMR expenditure analysis 2015 per household
Key points
Each bar represents
the % allocation of a
household’s income
to expenditure of the
item in question.
Also note, this is the
average expenditure
per household
within a particular
income category
Source all charts: BMR, (2015), Standard Bank Research
Recreation, entertainment and culture
Higher income groups allocate close to 5.4% on
average on furnishing, household equipment and
household maintenance.
Lower income groups allocate closer to 5.9% on
average. These households will be relatively more
affected by reduced risk appetite for credit extension by
retailers.
A household allocates more of their income to
recreational activities as they earn more income. The
highest income group allocates 8.8%. This is 6.8%
higher than the poorest income group.
Furnishings, HH equipment and routine maintenance
2
3.3
2.5
3.5 4
4.4
5.3
8.8
1
2
3
4
5
6
7
8
9
10
%
6 5.8
4.1
4.7 4.8 5.1 5.1
6
3
3.5
4
4.5
5
5.5
6
6.5
7
%
25
BMR expenditure analysis 2015 per household
Key points
Each bar represents
the % allocation of a
household’s income
to expenditure of the
item in question.
Also note, this is the
average expenditure
per household
within a particular
income category
Source all charts: BMR, (2015), Standard Bank Research
Transport (other, inclu. new vehicles)
The fuel levy increase will have affect all households,
but middle income groups will have been relatively
more affected.
Expenditure on Transport (other) , which includes the
purchase of new vehicles expenditure increases as income
increases.
The richest household spends 3 times more than the poorest
household on this category
Petrol
8 8.9
11 12.3
13.6 14.2
21.2
24.4
5
10
15
20
25
30
%
3.1 3.1
4.6
5.2 5.4
4.7
3.5
2.9
2
2.5
3
3.5
4
4.5
5
5.5
6
%
26
BMR expenditure analysis 2015 per household Key points
Each bar represents
the % allocation of a
household’s income
to expenditure of the
item in question.
Also note, this is the
average expenditure
per household
within a particular
income category
Source all charts: BMR, (2015), Standard Bank Research
Food, beverages and tobacco
Food expenditure comprises a large percentage of
poorer households’ budget. There is an inverse
relationship between food expenditure and income. As
income of the household increases, the percentage
spent on food decreases.
Food inflation is expected to affect the poor the most.
Food only
33.5
29
18.9
12.9
9.2 6.8 6.8 5.7
0
5
10
15
20
25
30
35
40
%
44.4
38.5
27
18.8
13.5 10.6 10.1 8.9
5
10
15
20
25
30
35
40
45
50
%
28 Introduction
We analyse expenditure patterns of the following items from a typical household’s consumption basket; the items are broken up as
follows:
– Clothing & footwear
– Communication
– Education
– Food
– Beverages & tobacco
– Furniture
– Household equipment & routine maintenance
– Health
– Hotels; cafes & restaurants
– Rent
– Electricity & Gas
– Housing; water; electricity; gas & other fuels
– Miscellaneous goods & services
– Recreation; entertainment & culture
– Petrol
– Transport
– Medical aid
– Insurance
– Other contributions
Source: BMR, (2015), Standard Bank Research
Expenditure Trends
We find that:
Low income groups (R0 – R86,000 per annum):
• Allocate large percentage's of their budgets to food (29%-34%), exposing them to high levels of food inflation.
• Transport expenditure is the second dominant item in the basket. It comprises between 11%-12% of this groups budget. This group will be
relatively more affected by oil price and fuel levy increases, and currency weakness.
• On average, very little is spent on education (1.5%).
• Contribution expenditure is also low (less than 1%). This means that some of these households might not have access to medical aid, insurance or
a private pension.
Middle income groups (R86,001- R1,481,000 per annum):
• Allocate 7%-18% of their budgets to food. This is at least 10% lower than the low income group. There is an exposure to high food inflation but not
as much as the two low income groups.
• Transport expenditure comprises between 15%-19% of this groups budget. Therefore this group will also be affected mostly by an increase in the
fuel levy, and currency weakness.
• On average, this group spends between 2%-4% on education. This is significantly higher than the low income group.
• Expenditure on contributions is also higher for this group compared to the low income group. This means that these households have better
access to medical aid and insurance. Total contributions expenditure is between 16% and 30% for these households.
Upper income groups (R1,481,001 - R2,360,001+ per annum):
• Largest spend is on transport (30.1%). This include the purchases of new vehicles. This could also highlight access to more expensive modes of
transport such as airlines, because of affordability. If one excludes petrol, transport expenditure increases the further one climbs up the income
brackets.
• Health expenditure is 6.7% of budget. The higher allocation to health highlights the fact that a higher income earners can prioritize health. If the
proposed tariff on pharmaceutical products is approved this would have a relatively bigger affect on upper income groups.
• Housing, water, electricity and gas make up 4.3% of the upper income budget. Furniture and household equipment purchases are also quite strong
in this category at close to 6%.
• There is an 8.8% budget allocation to recreational activities. This is the highest of any income group.
Source : BMR, (2015) Standard Bank Research
30
R0 - R19,000 (R0 - R1,583) (lowest income group)
Source all charts: BMR, (2015), Standard Bank Research
This income group spends 33.5% of their budget on food
and 10.9% on beverages and tobacco. This would mean
that the drought will severely affect this group as food
inflation rises.
The second biggest item on the budget is transport other
(8%).
Only 1.5% of this groups budget goes towards education.
1
11
21
31
41
51
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
33.5
10.9 8.3 8.0
6.2 5.3 5.1 3.1 2.9 2.6 2.5 2.4 2.1 2.0 2.0 1.5 0.9 0.5 0.1
0
5
10
15
20
25
30
35
40
%
31
R19,001 - R86,000 (R1,584 - R7,167) (second-lowest income group)
Source all charts: BMR, (2015), Standard Bank Research
Largest spend is on food (29%) and second largest on
transport (transport other plus petrol) (12%).
Miscellaneous goods and services (9.5%) is the third-
largest component
Total expenditure on housing amounts to 6.5%:
– housing, water & other fuels (2.4%);
– electricity and gas (2.6%) and
– rent (1.5%).
Additional spending on furnishings, household equipment
and maintenance is an additional 5.8%.
There is a relatively large amount spent on clothing by this
group (6.3%).
Contributions* amount to 6.33% of these households’
budget.
Health accounts for 5.5%.
Households in this income group spend approximately
38.5% of their budget on food and beverages and
tobacco. This is slightly lower than a household in the
lowest income group (44%). The drought will also
severely affect this group.
Households in this income group spend only 1.5% of their
budget on education.
5
25
45
65
85
105
125
145
165
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
29.0
9.5 9.5 8.9 6.3 5.5 4.9 4.3 3.3 3.1 2.6 2.4 2.4 2.3 1.5 1.5 1.4 0.9 0.6
0
5
10
15
20
25
30
35
%
32
R86,001 - R197,000 (R7,168 - R16,417) (low emerging middle)
Source all charts: BMR, (2015), Standard Bank Research
Largest spend is on food (18.9%) and beverages and
tobacco (11%). This comprises 27% of a household’s total
budget. This is a significant drop of more than 10%
compared to a household in the lower-income groups.
Transport expenditure including petrol is 15.6% of the
household’s budget.
Total Contributions* account for 15.1%.
Miscellaneous goods and services are 9.1%,
Total expenditure on housing amounts to 6.2%:
– housing, water & other fuels (1.7%);
– electricity and gas (2.4%) and
– rent (2.1%).
Additional spending on furnishings, household equipment
and maintenance is an additional 4.1%.
Health is also 6.3%
There is still a relatively large amount spent on clothing in
this group (5.4%).
Only 2.4% of a household’s budget in this group goes to
education, twice as much as low income households.
7.36
17.36
27.36
37.36
47.36
57.36
67.36
77.36
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
18.9
11.0
9.1 8.7 8.1 6.3
5.4 4.6 4.0 4.0
3.1 2.5 2.4 2.4 2.4 2.2 2.1 1.7 1.0
0
2
4
6
8
10
12
14
16
18
20
%
33
R197,001 - R400,000 (R16,418 - R33,333) (emerging middle)
Source all charts: BMR, (2015), Standard Bank Research
Largest spend is on food at 12.9%. Including beverages
and tobacco this comprises 18.8% of a household’s total
budget. This is a significant drop of close to 25.6ppts,
compared to the lowest income group.
The second-biggest item on a household’s budget for this
income group is total contributions* (22.2%).
Transport (Other plus petrol) accounts for 17.5%.
Miscellaneous goods and services account for 7.7%.
Total expenditure on housing amounts to 6.5%:
– housing, water & other fuels (1.6%);
– electricity and gas (2.7%) and
– rent (2.2%).
Health is 7.1%.
3.2% of a household’s total budget goes towards
education.
7
27
47
67
87
107
Bill
ions
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
12.9 12.3
11.2
7.7 7.1 5.9 5.6 5.6 5.2
4.1 4.1 3.5 3.2 2.7 2.4 2.2 2.1 1.6
0.6
0
2
4
6
8
10
12
14
%
34
R400,001 - R688,000 (R33,334 - R57,333) (lower middle)
Source all charts: BMR, (2015), Standard Bank Research
Largest spend is no longer on food, which accounts for
9.2%
Food including beverages and tobacco accounts for
13.5%.
Transport (other and petrol) at 19% is larger than food.
Contributions in total account for a whopping 26.8%.
Health expenditure (7.5%) is larger than miscellaneous
goods and services (6.6%).
• The higher allocation to health highlights the fact that a
higher income earners can prioritize health. If the
proposed tariff on pharmaceutical products is approved
this would have a relatively bigger affect on upper income
groups.
Total expenditure on housing amounts to 6.1%:
– housing, water & other fuels (2%);
– electricity and gas (2.7%) and
– rent (1.4%).
There is a higher spend on education, compared to the
other income groups (3.9%). These increases show that
access to education is greater if one’s income is greater.
There is also a 4% budget allocation on recreational
activities. Higher incomes therefore allow for greater non-
essential spending.
7
27
47
67
87
107
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
13.6 12.9
9.2
7.5 7.2 6.7 6.6 5.4
4.3 4.2 4.0 3.9 3.5 2.7 2.2 2.2 2.0 1.4
0.6
0
2
4
6
8
10
12
14
16
%
35
R688,001 - R1,481,000 (R57,334 - R123,417) (upper middle)
Source all charts: BMR, (2015), Standard Bank Research
Large spend is on food beverages and tobacco (10.6%)
Contributions* in total account for a whopping (30.6%)
Transport expenditure is larger than food expenditure
(18.9%).
Health expenditure is close to 9.5% of a household’s
budget. The higher allocation to health highlights the fact
that a higher income earners can prioritize health. If the
proposed tariff on pharmaceutical products is approved
this would have a relatively bigger affect on upper income
groups.
Total expenditure on housing amounts to 5.3%:
– housing, water & other fuels (2%);
– electricity and gas (2.3%) and
– rent (1%).
Furniture and HH equipment purchases are also quite
strong in this category. This is close to 5.1% per
household.
There is a higher spend on education, compared to the
other income groups (4%). These increases show that
access to education is greater if one’s income is greater.
There is also a 4.4% budget allocation on recreational
activities. Higher incomes therefore allow for greater non-
essential spending.
8
28
48
68
88
108
128
148
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
14.8 14.2
9.5 8.3
7.5 6.8
4.7 4.7 4.4 4.4 4.0 3.8 2.7 2.4 2.3 2.3 2.0
1.0 0.4
0
2
4
6
8
10
12
14
16
%
36 R1,481,001 - R2,360,000 (R123,418 - R196,667) (upper income/emerging
affluent)
Source all charts: BMR, (2015), Standard Bank Research
Large spend is on transport (24.2%)
Food beverages and tobacco (10.1%).
Transport expenditure is larger than food expenditure.
This could also highlight access to more expensive modes
of transport such as airlines because of affordability.
If one excludes petrol, transport expenditure seems to
creep up the further one climbs up the income brackets.
Contributions* account for 24.7%.
Health expenditure is 7.7% of a household’s budget. The
higher allocation to health highlights the fact that a higher
income earners can prioritize health. If the proposed tariff
on pharmaceutical products is approved this would have a
relatively bigger affect on upper income groups.
Total expenditure on housing amounts to 6.2%:
– housing, water & other fuels (3.3%);
– electricity and gas (2.3%) and
– rent (0.6%).
Furniture and HH equipment purchases are also quite
strong in this category at close to 5.1%.
There is also a 5.3% budget allocation on recreational
activities. Higher incomes therefore allow for greater non-
essential spending.
0
5
10
15
20
25
30
35
40
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
20.7
12.5
7.7 6.8 6.7 5.8 5.5 5.3 4.5 3.5 3.3 3.3 3.3 2.8 2.6 2.4 2.3
0.6 0.6
0
5
10
15
20
25
%
37
R2,360,001+ (R196,668+) affluent earning
Source all charts: BMR, (2015), Standard Bank Research
Largest spend is on transport (30.1%)
Food beverages and tobacco (8.9%).
Transport expenditure is larger than food expenditure.
This could also highlight access to more expensive modes
of transport such as airlines, because of affordability.
If one excludes petrol, transport expenditure seems to
creep up the further one climbs up the income brackets.
Contributions* account for 27.3%.
Health expenditure is 6.7% of budget. The higher
allocation to health highlights the fact that a higher income
earners can prioritize health. If the proposed tariff on
pharmaceutical products is approved this would have a
relatively bigger affect on upper income groups.
Total expenditure on housing amounts to 4.3%:
– housing, water & other fuels (1.2%);
– electricity and gas (2.4%) and
– rent (0.7%).
Furniture and HH equipment purchases are also quite
strong in this category at close to 6%.
There is an 8.8% budget allocation to recreational
activities. This is the highest of any other income group.
-2
3
8
13
18
Ran
d B
illio
ns
*Contributions is
comprised of:
Insurance, medical
aid and other
contributions
27.2
15.6
8.8 6.7 6.3 5.7 5.7 5.4
3.6 3.2 2.9 2.6 2.4 2.2 1.9 1.2 0.7 0.3
-2.5 -5
0
5
10
15
20
25
30
%
38 Disclosure and disclaimer
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