Car prices in South Africa have risen about 18% since the start of this year, partly because the declining rand has pushed up the price of imports.

Rising interest rates have also increased the cost of loans for car purchases by 3%.

But shoppers seem undaunted by the rising costs and are willing to borrow to cover them.

This suggests that the ability of consumers to take on additional credit is not sufficiently under control

SG Economic Research

Official consumer credit figures for July showed an expansion of between 14% and 15% compared to July last year.

"From a monetary management point of view this suggests that the ability of consumers to take on additional credit is not sufficiently under control," said SG Economic Research.

Growth picks up

South Africa's economy grew 3.1% in April, May and June, compared to 2.2% during the first three months of the year.

The South African Reserve Bank's last rate rise in June sparked debate among economists as to whether it was paying too much attention to inflation at the expense of economic growth.

The Bank has raised interest rates to support the rand.

But the currency's weakness has stimulated growth by attracting investment and cheapening exports, even though imports have become more costly.

The result has been an increase in disposable income among middle class South Africans "which has exceeded the constricting effect of three interest-rate rises", said SG Economics.