FACTORS like economic growth, inflation and the exchange rate should weigh heavily at the Reserve Bank's monetary policy committee meeting this week, but so will the plight of over-indebted consumers.
While lower interest rates are usually seen as a way to assist households, the opposite might hold now.
Household debt as a percentage of disposable income rose to 76.3% in the second quarter, while 6.9% of household disposable income went to servicing debt. Credit extension to the private sector grew 9.1% year on year in September, and in the third quarter was 12.1% higher than that of the second quarter.
Annabel Bishop, an Investec economist, said rising household debt means the bank should be cautious on easing rates further.
The National Credit Regulator says 9.2-million of 19.6-million credit-active South Africans have impaired credit records.
The consumer financial vulnerability index of Unisa's Bureau for Market Research and MBD Credit Solutions showed this week that pressure on consumers' cash flow has risen to a level last experienced in 2009.
* This article was first published in Sunday Times: Business Times