South African households are confronting a deepening affordability crisis as essential goods rise in price faster than earnings, pushing many families to the edge of financial collapse, according to economic justice advocates.
Mervyn Abrahams of the Pietermaritzburg Economic Justice & Dignity Group outlined the mounting pressures facing consumers, emphasizing that the South African Reserve Bank’s decision to raise the repo rate by 25 basis points has intensified hardships already driven by surging food and fuel expenses.
“Consumers in fact are carrying the South African economy at the moment,” Abrahams said, citing monitoring data that shows a basket of 44 staple food items climbed by 123 rand last month and rose by an additional 23 rand this month—totaling roughly 150 rand in added costs for basic groceries within four weeks.
Combined with fuel price hikes and the likelihood of increased taxi fares, these trends are placing severe strain on household budgets. Abrahams noted that with minimal savings and substantial existing debt, higher interest rates now add heavier debt-servicing obligations on top of rising prices for essentials.
“When households must cut back, it is most often food that gets reduced,” he explained, describing how families are forced to scale down consumption as a survival tactic.
The growing dependence on credit to meet daily needs further illustrates the depth of the challenge. Abrahams observed that many households are turning to credit cards and retail store cards—including those at clothing retailers that stock food items—to cover basic living costs. This pattern, he stressed, reflects a troubling deterioration in household financial resilience.
“Wage income in households is insufficient for families to survive on just the basic necessities of life,” Abrahams stated. He pointed to the recent 8.7% electricity tariff increase affecting households directly supplied by Eskom, with municipal customers anticipating similar adjustments in June and July. For a household purchasing 350 kW of electricity, this tariff rise alone absorbs nearly half of the national minimum wage increase that took effect in March.
Abrahams also questioned the effectiveness of current monetary policy in addressing inflation’s underlying drivers. “Our inflation problem is directly connected to global fuel prices,” he said, linking international volatility to geopolitical tensions involving America and Israel’s actions regarding Iran. “No matter how much we increase the repo rate, we are not solving the root cause of inflation whilst at the same time taking money away from households that they could use to spend and drive our economy.”
He warned that sustained interest rate increases could dampen GDP growth this year and contribute to rising unemployment.
Regarding practical measures for households, Abrahams offered a sober assessment: “There is no more place to pull to tighten belts. In fact, our households are under-spending on nutritious food.” He argued that lasting relief requires policy action focused on supply-side reforms—specifically, more affordable electricity, improved transport infrastructure, and expanded public transit options to reduce recurring household expenses.
“Lowering costs for households will begin to allow families to better manage their finances and rebuild savings,” Abrahams concluded.
