Following the latest repo rate hike, consumers are warning they have little room left to absorb further financial shocks as food, electricity and debt costs continue to rise.
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Nearly half of South African consumers believe they would struggle financially if interest rates increase again, highlighting growing concerns about household affordability after the latest rate hike.
A new consumer survey conducted by Debt Rescue in June 2026 found that 48.5% of respondents would experience severe financial pressure and do not know how they would manage if borrowing costs rise further.
The findings come shortly after the South African Reserve Bank (Sarb) increased the repo rate by 0.25 percentage points in May, bringing the repo rate to 7% and the prime lending rate to 10.5%.
The increase came amid continued pressure from rising living costs, fuel prices and higher household expenses.
Debt Rescue CEO Neil Roets said the survey highlights a deeper concern around household financial resilience.
"What is most evident is not simply that consumers are worried about higher interest rates, it is that so many respondents believe they would struggle to cope with another increase," Roets said.
"Over the past few years, households have faced repeated increases in the cost of living, from food and fuel to electricity and debt costs. The survey suggests that many consumers may now be reaching a point where there is very little room left to absorb further financial shocks."
The survey revealed that 32.2% of respondents would need to make significant cuts to their budgets if interest rates rise again, while 77.5% expect further increases before the end of the year.
Roets said consumer expectations provide an important indication of how households are preparing for future financial pressure.
“When households anticipate future financial pressure, they typically become more cautious, reduce discretionary spending and delay major financial decisions,” he said.
The pressure is already being felt across household budgets, with 50.9% of respondents identifying food, electricity and other basic living expenses as the areas most likely to be affected by further rate increases.
Food and groceries remain the biggest affordability challenge, with 39.6% of respondents saying these costs are the hardest to manage, followed by fuel and transport at 28.6% and electricity and utilities at 19.6%.
Roets said rising interest rates affect more than just debt repayments because they reduce the amount of money available for essential household needs.
"Every additional rand spent servicing debt is a rand that is no longer available for groceries, transport or other household necessities. Consumers experience these pressures collectively, not individually," he said.
The survey also showed that many households may struggle to maintain debt repayments if borrowing costs rise further.
A total of 66.9% of respondents acknowledged some likelihood that they could fall behind on debt repayments, with 38% saying this was very likely.
Roets said interest rate increases create unique challenges because consumers have limited flexibility when it comes to long term financial commitments.
"Interest rate hikes affect some of the most important financial commitments consumers make. Home loans, vehicle finance and other credit agreements form part of a household's long term financial structure. Unlike many day to day expenses, these obligations cannot easily be reduced or postponed," he said.
The pressure on consumers comes against a backdrop of slowing household spending. Citadel Chief Economist Maarten Ackerman warned that consumer activity was already weakening before additional economic pressures emerged.
“The sharp slowdown in household consumption is concerning, as consumers were already under pressure before the latest geopolitical and inflationary risks emerged, which suggests that households may find the coming quarters increasingly difficult,” Ackerman said.
The Debt Rescue survey further found that 74.2% of respondents feel stressed, worried, anxious or overwhelmed about the possibility of further interest rate increases.
More than half of respondents, 56.8%, said they feel unprepared for another increase, while 53.5% reported feeling financially insecure about the next six months.
More than 80% also expressed concern about the combined impact of rising fuel prices and interest rates on their household finances.
Roets said financial stress is not only reflected through income levels and debt balances, but also through consumer confidence.
"Financial resilience is not only reflected in income levels or debt balances. It is also reflected in a household's confidence that it can withstand unexpected financial pressure," he said.
"Consumers are not only worried about the next interest rate increase; many are anxious about whether they have the capacity to absorb any additional financial pressure at all."
While global developments, including falling oil prices after the US and Iran peace framework, have reduced expectations of further aggressive rate increases, many households remain under strain.
Economists have suggested that lower fuel prices and easing inflation pressures could create room for future interest rate cuts, but Roets warned that consumers may take longer to experience meaningful relief.
"The encouraging development is that the pace of pressure may begin to slow if lower oil prices are sustained. The mistake would be to confuse that with relief already having arrived," he said.
"Consumers remain financially vulnerable, and it will take sustained improvements over time before many households notice a meaningful difference in their disposable income."
Roets encouraged consumers facing prolonged financial pressure to seek professional assistance before debt becomes unmanageable.
The survey suggests that while interest rate movements remain a key economic indicator, the bigger challenge facing many South African households is the limited financial space left to absorb another shock.
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