The Competition Commission’s first cost of living report has laid bare the deepening financial strain on South African households, showing that the price of essential goods and services has risen well above inflation over the past five years.

The Witness reports that, according to Nelisiwe Khumalo, a senior associate in the Competition Law practice at Cliffe Dekker Hofmeyr, the report makes clear that lower-income households are carrying the heaviest burden, with steep increases in food, electricity, water and transport costs.

“The report shows that the cost of living in South Africa has risen sharply, particularly for low-income households. Essential goods and services, such as food, electricity, water and transport have increased well above general inflation,” Khumalo says.

Inflation target narrowed to ease pressure

This week, Finance Minister Enoch Godongwana officially reduced South Africa’s inflation target to 3%, with a tolerance band of one percentage point on either side, over the next two years in a bid to ease pressure on consumers.

The new target replaces the previous 3–6% range, with a midpoint of 4.5%, in place since 2000.

South Africa’s average inflation rate remains higher than those of its major trading partners and emerging-market peers, eroding competitiveness and contributing to a weakening rand.

Higher inflation also raises the cost of living, especially for the poorest households.

Electricity and water hikes far outpace wages

Speaking to The Witness, Khumalo notes that over the past five years electricity prices have increased by 68%, while water tariffs have climbed by 50%, far outpacing wage growth.

“Even if headline inflation appears to be stable, the real purchasing power of South Africans — especially poorer households — has eroded,” she says.

The commission found that the average worker now spends more than 57% of their income on transport and electricity, leaving little room for food and other essentials.

Khumalo says rising interest rates have added further pressure to already strained households.

“Bond repayments have increased by about 28% between 2022 and 2025, making mortgages and other credit significantly more expensive. This is especially difficult because salaries have not grown at the same pace,” she adds.

She says that official inflation figures may underestimate the true burden on bonded households because they measure ‘owner’s equivalent rent’ rather than actual bond repayments.

“This means the real financial pressure on homeowners is greater than inflation figures suggest,” she adds.

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