Deeply indebted consumers must prepare for yet more pain after the Reserve Bank decided to increase the repo rate by 25 basis points pegging the rate at 6%.
Neil Roets, CEO of one of the largest debt counselling companies in South Africa, Debt Rescue, said the increase comes at a time when electricity tariffs and the fuel price are near all-time record highs.
"Deeply indebted consumers are incredibly vulnerable to any price increases and the escalation in the cost of borrowed money is going to have a very real impact on them.
"Home owners with bonds to repay can expect a significant increase in their monthly repayments. It is also going to have a direct impact on the cost of all goods and services."
He said the fact that total consumer debt now tops R1.427-trillion (according to the latest figures released by the reserve bank) shows that consumers are having a very hard time.
"We know from figures released by the National Credit Regulator and Statistics South Africa that the majority of indebted consumers already owe 75% of their monthly pay to creditors. More than half are three months or more behind in their debt repayments."
Inflation accelerated by 0.1 of a percentage point to 4.7 percent year on year in June from 4.6 percent year on year in May, Statistics SA data showed on Wednesday.
"This is well within the reserve bank's target of three to six percent. However, there are concerns that inflation is set to rise in the next few months." Roets said.
Pensioners with investments will welcome a rate increase but with toll roads, an increased fuel prices and rising food costs, many consumers will be feeling the pain.
"We are seeing growing numbers of indebted consumers knocking on our doors as a last resort to try and get out from under their mountain of debt by going under debt review.
"This remains the best way from deeply indebted consumers to pay off their debt in smaller instalments over a longer period of time whilst enjoying full legal protection. None of their assets may be attached by debt collectors while they are under debt review," Roets said.