October 28, 12:54IOL

Income in South Africa is growing, but the purchasing power of the population is declining due to rising prices

Wage earners in South Africa are receiving slightly more money than last year, but this increase is insufficient to offset the rising cost of living, leading households to have less purchasing power despite nominal wage growth.

According to the PayInc Net Wage Index, which tracks about 2.1 million wage earners, the average monthly net wage in September was R21,689, which is 0.3% higher than in August and 1.8% compared to last year.

However, when inflation is taken into account, the picture changes. The real net wage index only grew by 0.1% per month to R20,178, remaining 2.6% below the level of a year ago.

This data demonstrates pressure on household finances, as rising transport costs affect the economy by increasing the prices of goods and services, while wage increases remain modest.

Expert Comments

Shergeran Naidu, Head of Stakeholder Engagement at PayInc, noted: 'The average nominal net wage increased in September 2026 to R21,689, which is 0.3% higher than in August and 1.8% compared to a year ago.'

Nominal wages have been growing gradually, but the pace remains moderate. The average nominal index grew by 1.7% since the beginning of the year compared to an increase of 3.7% for the entire year of 2025.

In real terms, the trend is more concerning for consumers. PayInc data for the current year shows that average net wages have decreased by 2.2% after accounting for inflation, limiting funds available for non-essential expenses and negatively affecting consumer confidence.

Calculated Increases

The index accounts for net wage payments deposited into bank accounts after deductions such as income tax and employee pension contributions. It covers earners whose net income ranges from R5,000 to R100,000 per month, not the entire workforce.

Higher fuel prices have added pressure to household budgets this year, and also increased costs for businesses transporting goods across the country.

Independent economist Eliza Kruger stated that the significant rise in fuel prices since April, following the start of the conflict in the Middle East, has led to increased operational and transport costs across the economy. This impact has spread from households to energy-intensive sectors such as mining and manufacturing.

Kruger emphasized: 'Transport costs have become a significant factor in the growth of producer and consumer inflation, while elevated international oil prices continue to put pressure on the domestic economy.'

What could the growth look like?

At the time of preparing the report, the price of Brent crude oil was around $114 per barrel, and uncertainty related to the conflict clouded the fuel price forecast.

The cumulative rise in local fuel prices has been quite significant. Despite temporary government support in the form of partial reduction of fuel levies in November and December, PayInc predicted that the price of 95 octane petrol would still be approximately R10 per liter higher in November than in March. A corresponding increase for diesel with 0.05% sulfur content was expected to be around R12 per liter.

This support measure is intended to cushion the blow to households and businesses, but it does not negate the growth that has already occurred. Kruger warned: 'Given South Africa's reliance on road transport, businesses may face difficulties in fully compensating for these increases, which raises the risk of further price adjustments across the economy.'

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iol.co.zaOctober 23, 12:00

Cape Town City Budget Forecasts: Water and Electricity Tariff Increases Over Three Years

The three-year budget forecast for Cape Town City indicates that by 2028/29, residents will have to pay 36% more for water and 24% more for electricity compared to the prices of the 2025/26 fiscal year.

Practically, this means that the cost of 100 units of electricity at June 2026 prices will be 124.50 rand starting from July 2028, and 100 units of water will cost 136 rand.

Despite Cape Town aiming to minimize price increases this year (the election year), the figures in its own budget forecasts suggest otherwise. The electricity tariff increase this year is 5.83%, and next year it will increase by another 8.49%, followed by another 8.39% in the subsequent year.

The projected national inflation rate is 3.4% this year, 3.2% next year, and 3.1% in 2028/29. Thus, accumulated inflation over three years will add about 10% to the cost of services, which is 14% less than the electricity price increase in Cape Town and a substantial 26% less than the proposed water price hike by the city.

These figures are criticized as unacceptable in a city that is becoming increasingly unaffordable for the vast majority of the population. These numbers highlight the priorities of the DA party, making services almost accessible only to the middle class, expatriates, property buyers, and Airbnb owners, but completely unmanageable for everyone else.

According to Cape Town Mayor Geordie Hill-Lewis, the city is working to improve electricity affordability by reducing dependence on Eskom. However, readers must judge the sincerity of Hill-Lewis's promises regarding affordability in light of his own proposed price increases.

In addition to water and electricity costs, rates also show a similar pattern characteristic of an election year: a 2% reduction in rand rates to compensate residents for an premature overall assessment that effectively forces them to pay more.

The DA calls for voters to support them this year but warns that next year they will increase rates by 6% based on increased property values, and in 2028/29 by another 8.13%.

Affordability, according to the author, is not just a slogan but a result of political decisions made during the budget compilation process. The DA elections benefit a very small group of people living and working in Cape Town.