South Africans say they feel optimistic about their finances, but their behavior tells a different story. As the costs of electricity, education and health care continue to rise, households are quietly reorganizing how they spend, save and borrow to make ends meet.
South African consumers are not reacting to the decline in the cost of living in the way you might expect.
Households are shifting toward what can best be described as defensive consumption. They're reorganizing their financial lives around a simple reality: The fastest-growing costs are the ones they can't avoid.
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And that's changing everything.
under pressure
Competition Commission's latest cost of living report This makes it clear that South Africa's affordability crisis is driven by administered and essential costs rather than discretionary spending.
Electricity prices have increased by about 85% since 2020, water prices have increased by about 68%, both far higher than headline inflation of about 30%. Public school fees and health care costs have also been outpacing inflation, while rents have remained relatively controlled.
Each edition of the Cost of Living Report includes a “deep dive” into a major cost driver. In this edition, the focus is on electricity rates. Electricity is a direct household expense and a major cost for businesses. When tariffs increase, they put pressure on household budgets and can raise prices throughout the economy, including food and transportation.
The report found that pricing approaches that add costs on top of costs, including at the municipal level…