John Loos, Economist, and Paul Yon, CEO of VCCB
The conflict in Iran has created a long-running economic shock that’s affecting individuals and companies globally. Oil prices are jumping around, reaching a Brent crude oil of $107 in early April, and official forecasts suggest it could stay above $95 in the near term. Even if prices ease into the $90 range, they are still higher than a year ago and they are likely to stay elevated throughout 2026. Problems in and around the Strait of Hormuz are not going to disappear overnight and it will take time to rebuild trust in shipping routes, restore production capacity and reach new agreements that will calm the market.
For the consumer, this is going to hit in a number of ways. First is an inflation surge, not only a direct impact for consumers at the petrol pump, but possibly also via an indirect effect, because fuel is a major input throughout the economy. Higher inflation eats into disposable income to a greater extent, curbing “real” consumer purchasing power. This alone could cause slower real (inflation-adjusted) disposable income growth in 2026, after a strong 3.3% growth rate in 2025. Interest rate hikes are also a very real risk and job creation is exposed to any slowdown in global growth. These challenges threaten to reach consumers through fuel bills, grocery costs, bond repayments and salary increments that don’t keep pace with the cost of living.
From a consumer credit perspective, pressures are already showing. Unsecured lending has grown faster than any other credit line with loan frequency increasing but average loan sizes falling. This pattern points to consumers borrowing to cover monthly costs rather than investing or acquiring assets. Over the first two quarters of 2025, loan originations increased by 41% while the average opening balances declined by 13%. In lower income segments, the concentration of this borrowing is particularly acute.
South African policymakers have a choice to make. Amidst these challenges there are also benefits and right now, they may very well be a catalyst for very real change in the country. South Africa has spent years deferring structural reforms, partly because commodity cycles and global growth have provided a degree of cover. Now, much of the cover is gone and the resultant uncertainty might be accelerating economic policy reform aimed at faster growth.
In recent years, electricity supply has improved, a significant port concession at Durban port has been awarded, railway concessions are progressing and the GNU coalition understands, with unusual clarity, that economic performance is now a political imperative. And the current geopolitical complexity and fuel instability could very well be what consolidates this process.
However, as the cogs of government and change move at an achingly slow pace, consumers need options now. The room to manoeuvre is fairly limited, especially for lower-income households, but there are some solutions that consumers can focus on right now that can deliver measurable benefits through tough times.
Big‑ticket financial decisions are a good place to start. People often underestimate the true cost of a house or a car and can save a lot by downsizing (or proactively buying well-within their means)to cut not just the instalment, but also insurance, maintenance, levies and day‑to‑day running costs in one go. Commuting is another major expense that many South Africans treat as non‑negotiable, even though it doesn’t have to be for many. Simple changes like joining a lift club can take some of the sting out of rising fuel prices and transport costs. Consumers can also cut their everyday living costs by reducing their reliance on non-essentials such as eating out, food takeaways and deliveries, switching off (or turning down) geysers, optimising admin errands, and cutting subscriptions and lifestyle extras.
These are some the most important steps you can take to protect one of the most valuable financial assets right now: a clean credit record. Responsible credit behaviour in a contracting economic environment is a strategic way to position financial wellbeing for when conditions improve. Having a good credit record is the instrument that determines access to finance for a home, a vehicle or a business and it’s essential to avoid damaging it in a moment of short-term pressure.
This means being deliberate about which credit obligations to prioritise, careful budgeting and ruthlessly honest about which new credit to avoid. Unsecured lending, for example, to cover groceries or fuel is the beginning of the treadmill as the cost of repayments and the risk of debt can have a ripple effect across every other credit facility. Debt review, an aggressively marketed answer to this situation, removes the consumer from the credit market entirely for the duration of the process, and often well beyond it. For consumers who’ve genuinely exhausted every other option, it may be necessary, but it should be the last resort rather than the first response to pressure.
The harder but more rewarding road is to adjust ahead of the pain by reducing (or proactively containing from the start) large fixed costs, resisting instant gratification when it comes at a credit cost, and using this steady foundation from which to navigate the oncoming headwinds. Right now, complexity and disruption are impacting the country on multiple levels but democratic accountability is increasing. However, the road to structural reform, and higher longer term economic and household income growth, is a slow one, and in the mean time consumers need to fortify finances and ensure their credit and financial stability are maintained.
ENDS
