Rising food, fuel, and electricity costs are putting pressure on South African household finances, leading many to seek additional sources of income and consider taking on more debt. According to research by market research group NielsenIQ (NIQ), nearly three-quarters of financially pressured consumers are likely to seek additional income streams, including side hustles. A quarter of consumers are likely to increase their debt to afford their current lifestyles.
The NIQ Consumer Outlook 2027 survey, which covered over 21,000 respondents across 31 countries, found that 41% of South Africans say they are financially worse off than they were a year ago, compared to 37% in the previous year. Only 38% say they are better off. The research also found that rising living costs are the biggest reason financially challenged South Africans give for their worsening circumstances, with 79% of respondents identifying the cost of living as a major factor affecting their finances.
Food prices are the biggest immediate concern, with 34% of consumers worried about further increases. A further 23% are concerned about higher utility bills, while 22% point to fuel and transport costs. The findings show how households are responding to pressure on their budgets, with consumers becoming far more selective about how they spend their money. More than four in 10 consumers say they have stopped buying certain products so they can focus on essentials.
To stretch their budgets further, about half of consumers are shopping more often at discount and value retailers, while nearly six in 10 are making greater use of loyalty programmes and reward points. Many are also keeping a close eye on the total cost of their shopping baskets rather than focusing only on individual item prices. Promotions are playing a bigger role in purchasing decisions, with nearly half of consumers saying they are likely to buy in bulk or stock up on their favourite brands when they are on special.
The consumer market is becoming divided between shoppers looking for lower prices and those prepared to pay more for premium products, while mainstream-priced goods face pressure. According to NIQ South Africa MD Zak Haeri, South Africa is an extreme example of a global trend: the mainstream market hollowing out while both value and premium products gain share. The research found that 14.9% of sales value comes from value products, while mainstream products account for 52.6% and premium products 32.6%.
Affordability remains the biggest driver of purchasing decisions, with 39% of shoppers saying it is the most important factor when deciding whether a product is worth the price. However, consumers are not focused on cost alone, with more than a quarter (26%) placing the greatest value on quality and performance. This suggests that consumers are looking for products that deliver lasting value rather than simply the cheapest option.
Financial pressures are also influencing longer-term decisions, with three-quarters of consumers exploring ways to generate additional income and a quarter saying they may take on more debt to manage rising living costs. According to Haeri, these realities are making consumers more deliberate and discerning in their spending, increasingly scrutinising their purchases and expecting brands and retailers to clearly demonstrate why their products deserve a place in their budgets.
Key points
- South Africans are seeking additional income streams and considering debt due to rising living costs.
- The consumer market is becoming divided between shoppers looking for lower prices and those prepared to pay more for premium products.
- Affordability remains the biggest driver of purchasing decisions, but consumers also value quality and performance.
