Real household spending in the third quarter of 2011 increased to 3.7%, the Reserve Bank said on Thursday.

"Having increased at an annualised rate of 6.4% in the first quarter of 2011, growth in real expenditure by households decelerated to 3.3% in the second quarter but increased again to 3.7% in the third quarter," said the central bank in its Quarterly Bulletin released on Thursday.

The bank said the increase could be due to sharp spending on durable goods and services alongside moderate spending on semi and non-durable goods.

"The ratio of consumption expenditure by households to gross domestic product amounted to 58.6% in the third quarter of 2011 - slightly lower than the 59% recorded in the preceding quarter," noted the bulletin.

In the first three quarters of 2011, the level of real expenditure by households increased by 5.1% compared with the corresponding period in 2010.

Growth in real expenditures by households on durable goods accelerated from an annualised 14.1% in the second quarter to 17.8% in the third quarter. Households stepped up spending on vehicles, computers and related equipment and as well as on recreational and entertainment goods.

"Increased spending on new motor vehicles could be ascribed to the availability of new products following supply disruptions in motor vehicle parts in the second quarter of 2011, more affordable prices alongside the relatively low cost of credit, and pre-emptive buying following the recent sharp depreciation in the external value of the rand which was expected to feed through to higher prices in the near future."

In the third quarter, real spending on semi-durable goods decelerated to 6% from 9.5% in the second quarter. Real spending on semi-durable goods advanced by 7% in the first three quarters of 2011 compared with the corresponding period in 2010.

Growth in household spending on non-durable goods moderated from an annualised rate of 1% in the second quarter to 0.7% in the third quarter. According to the bulletin, the slower pace was noticeable in spending on food, beverages and tobacco and household consumer goods as a recent sharp increase in food price inflation had a dampening effect on these.

Spending on services, the largest portion of expenditure by households, increased at an annualised rate of 2.4% in the third quarter of 2011, compared with an increase of 1.2 % in the preceding quarter.

Growth in real household disposable income edged higher to 3.9% in the third quarter. For the first nine months of 2011, real household disposable income increased by 5.8% due to the creation of some temporary jobs and higher employment levels at provincial government level.

Source - BuaNews

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