It is going to be an expensive Christmas for consumers. Durban counselling agencies and economists have painted a gloomy picture of this festive season as food prices rise, and have urged the “working middle class” to spend cautiously at this time.

The prices of food essentials rose more than 2 percent in the past month, according to Mervyn Abrahams, director of the Pietermaritzburg Agency for Community Social Action (Pacsa), who runs a monthly food price barometer.

“Month-on-month, the Pacsa food basket increased from R1 860.60 in September to R1 911.86 the next month,” he said. The price of a basket including maize meal, rice, cake flour, white sugar and cooking oil, which he labelled as the “big foods”, came to R607.45.

“This is an increase of 23 percent year-on-year,” he said. “The prices of these foods determine dietary diversity on the plate. High increases mean that low-income households cut back on foods which are important for balanced nutrition, such as meats, fish, eggs, dairy and vegetables.”

Many items were simply left out of the trolley because of the cost, he said. To exacerbate the problem, food prices often “spike” before and during the festive season.

“There is no doubt that rising food prices affect the poorest households the most. But what we find is that the working middle class do not have much room to manoeuvre. At the same time there is an expectation to provide some level of relaxation, and everyone desires something extra, and parents want to provide something for their children, but there is not much of a budget for this to happen.”

Abrahams said that to fulfil that desire, many resorted to credit card debt or took out loans to buy goods.

“This working middle class have access to these financial products, but the problem is that the next month they have to finance the debt, and this is how people begin to get trapped in debt. This is a critical period for families because hot on the heels of the festive season is the back-to-school season, and parents need money to pay for all the school necessities.”

Thobeka Ngidi, marketing manager for Durban’s Pioneer Debt Solutions, a debt review company, said that many people saw the festive season as their last chance to get credit before seeking help, making it a spending holiday.

They played a delaying game, she said, before seeking help from debt counsellors in the New Year when reality struck.

“Anyone can fall into this trap, from people earning R3 000 a month to people earning R50 000.”

First National Bank said it discouraged customers from taking on additional debt merely to fund festive-season spending.

“Consumers are encouraged to save for such expenditure and borrow only when this is required for necessary expenses, such as paying for home improvements or funding children’s education,” said Hannalie Crous, head of credit for FNB Retail.

“In a similar manner, taking on too much debt with the explicit idea to then apply for debt review is also not a responsible way to manage financial affairs. Consumers should borrow responsibly and ensure that repayments on debt are affordable. This is a joint responsibility, not only the bank’s.”

John Loos, a property strategist with FNB, said: “Coupled with the myriad adverse economic forces that have already been hammering household income growth and credit extension since the beginning of the year, low consumer confidence levels are likely to translate into weak retail sales growth during the Christmas holidays.”

Economist Mike Schussler said that with little tax relief this year and reduced or no bonus payments, the formal sector would not be in a spending mood.

“It’s a very hard and harsh situation for most consumers,” said Schussler. “People are tightening their belts. Retail sales in the past three months are at their weakest growth in eight years. Add vehicle sales to this, which are down 10 percent a year, and you are actually seeing a decrease in overall consumption expenditure.

“The economy is not doing well enough for people to be getting big bonuses, so it’s going to be a hard Christmas, which hasn’t been great for the past few years, but this one is going to be the hardest.”

Independent on Saturday