Africa's most advanced economy is grappling with high inflation, rapidly rising interest rates, low wages growth and rolling electricity blackouts, with around a third of the workforce unemployed.
The pressure on consumers is becoming increasingly evident in retailers' results.
"There's no doubt that credit has been fueling the system for at least the last 12 months," Mark Blair, CEO of clothing retailer Mr Price, told investors on Thursday.
The company, which caters primarily to low-to-middle income customers, saw an 8.3% rise in sales on credit in the year ended April 1, it said.
Credit applications jumped 30.9% year-on-year, while its net bad debt ratio rose to 8.4% from 6.0% a year earlier, it added.
While South African inflation retreated to a 13-month low on Wednesday, it averaged 6.9% in the year ended 31 March, up from 4.5% a year earlier.
To tame it, the South African Reserve Bank has raised interest rates by a total of 475 basis points since it began the policy tightening cycle in November 2021, making it more costly for consumers and companies to service debt.
Retailers have also been hit by rolling power blackouts, sometimes up to 10 hours a day, which have reduced trading hours and added the cost of running diesel generators.
TFG, which usually targets high-end customers, saw its sales on credit increase by 11% in the year ended 31 March, it said earlier this month, adding its bad debts for the period increased by more than a third.
Lewis Group, a retailer primarily relying on credit sales, said its bad debts rose to R919m ($50m)in the year ended 31 March from R902m a year earlier.
($1 = R18.4893)
Reuters, the news and media division of Thomson Reuters, is the world's largest multimedia news provider, reaching billions of people worldwide every day.
Go to: https://www.reuters.com/
