JOHANNESBURG, Gauteng — South African household budgets remain under sustained pressure as essential goods and services continue to rise faster than overall inflation, according to the Competition Commission’s 2026 Cost of Living report. Raksha Darji, a principal economist at the Competition Commission, emphasized that despite falling producer costs in certain sectors, everyday expenses like electricity, water, healthcare, and transport are keeping families financially strained and forcing difficult trade-offs.
The Inflation Disconnect
While headline inflation slowed to 4.3% in July and food inflation fell to just 0.9%, the reality on the ground tells a different story. Darji noted a stark disconnect between macroeconomic inflation numbers and the lived experience of consumers. The Commission’s study focuses on essential goods and services that lower-income consumers cannot do without, revealing that these specific costs are rising far higher than the general inflation rate. As a result, families are actively shrinking their food budgets just to cover mounting utility bills.
Soaring Utility and Education Costs
The report highlights inconceivable spikes in administered prices between 2020 and 2026. Over this period, electricity costs have spiked by 85%, and water costs have surged by 68%, far outstripping general inflation. Darji pointed out that while reforms are currently underway for both electricity and water—including efforts to make more free electricity available to qualifying low-income households—pricing methodologies must also be restructured to create the right incentives for cost reduction.
Education is following a similar trajectory. School fees for public primary and secondary schools (in quantiles where fees are applied) have surged by approximately 42% over the same 2020 to 2026 tracking period. Darji explained that high operational costs, including salaries and maintenance, are pushing fees higher as schools struggle to make up for shortfalls in allocated budgets.
The “Rocket and Feather” Pricing Effect
A major concern flagged in the report is the asymmetric pricing behavior in the retail sector, where prices shoot up like a rocket during supply shocks but come down like a feather when costs ease.
While record harvests have significantly reduced farm-level commodity prices for maize and oil seeds, these savings are not fully translating to the consumer. Darji noted that while there has been some pricing restraint at the retail level for maize meal and sunflower oil, other essential categories tell a different story. For products like IQF chicken and tinned fish, retail prices have continued to increase even as producer prices have remained stable or declined.
When questioned about where the excess money goes, Darji stated that the Commission is actively investigating whether these stubborn margins are driven by legitimate input costs, such as fuel, or if profiteering is occurring at various levels of the value chain.
Healthcare and Transport Squeeze
The burden extends critically into healthcare and transport. With only 16% of the South African population holding a private medical aid scheme, the remaining 84% rely entirely on the public sector. Darji warned that with medical aid premiums consistently rising above general inflation, there is a severe long-term economic risk that citizens will be priced out of seeking necessary primary healthcare.
Transport costs also present a persistent challenge. Fuel prices increased by approximately 26% from April onwards, driven in part by global geopolitical conflicts. While taxi fares—a primary transport mode for lower-income households—increased by about half of that rate, Darji cautioned that historical trends show taxi fares rarely decrease when fuel prices drop. This creates a permanent negative impact on commuters, some of whom already spend over 40% of their income on basic necessities.
Commission’s Next Steps
Addressing the frustration of the “working poor” and middle class who earn too much to qualify for meaningful assistance but not enough to comfortably absorb these costs, Darji affirmed that the Commission is moving beyond mere monitoring.
The Competition Commission releases these cost-of-life reports every six months to track prices and monitor market behavior. If advocacy and public flagging do not correct pricing behavior, Darji confirmed that the Commission is prepared to initiate formal investigations, launch market inquiries, and utilize its full regulatory toolkit to intervene, unpack the value chain, and ultimately bring relief to South African consumers.
