A new report from Momentum Investments shows that higher-income earners are displaying higher levels of purchasing power despite the current economic conditions.
Middle to high-income earners are driving a recovery in South Africa’s hospitality sector and new vehicle sales, says Momentum Investments.
This was reflected in employment statistics, as well as income growth – figures pointed to the positive, the group said, This offers them more flexible budgets compared to other most cash-strapped consumers.Growth in restaurant and hotel spending has increased from an average of 0.5% before the pandemic in 2019 to 4.7% last year.
Increases in released profits, fees charged and business volumes are the primary drivers of this increased confidence.Restaurants, on the other hand, have seen their prices go up as a result of higher food prices and load shedding costs, said Momentum. Momentum said that the increase in restaurant expenditure might also be due to a preference for convenience through food deliveries when load shedding is frequent.Momentum says that the number of new vehicles sold has gradually increased since a trough in June 2020.New vehicle sales are increasing despite a substantial increase in interest rates, high inflation rates and weak consumer confidence.
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