Cost-of-living (CoL) pressures remain structurally embedded in South Africa, despite the moderation in headline inflation, the Competition Commission states in its second CoL report.

It adds that essential goods and services continue to increase at rates above overall consumer price inflation, reinforcing financial strain for households.

The CoL report builds on the commission’s Essential Food Price Monitoring, launched in July 2020 to track selected staple-food prices from farm to retail, with the second iteration focused on how the prices of basic goods and services have changed since 2020 and what this means for household budgets.

From 2020 to January this year, electricity prices rose by about 85% and water prices by about 68%, significantly above overall inflation which increased by 30% over the same period.

The commission says the persistence of these increases reflects deeper structural challenges within the utility sector, including ageing infrastructure, high debt burdens, operational inefficiencies and the need for ongoing capital investment.

Additionally, primary healthcare – general practitioner (GP) – consultation costs have risen faster than overall inflation and remain high.

The commission says GP tariff increases for this year are expected to be broadly in line with medical inflation of about 4.2%.

However, the report notes that, between April 2025 and January this year, petrol prices stabilised after sharp swings in earlier years. Prices fell in 2025 and were broadly steady in January.

Taxi fares moved in line with petrol, and the gap between taxi fares and overall inflation narrowed.

The commission notes, however, that renewed instability in the Middle East has pushed oil prices higher, resulting in significant increases in fuel prices for April. This is already putting upward pressure on fuel and transport costs from April. Higher fuel costs can feed through to the prices of other goods, including food.

Meanwhile, from 2020 to January this year, primary education costs rose by 37% and secondary education costs rose by 42%, both above headline inflation.

The commission says this is largely owing to increasing operational costs which are not sufficiently covered by government funding.

The CoL report also looks at the gap between what producers receive and what consumers pay for selected foods, including canned pilchards, eggs, individually quick frozen (IQF) chicken, sunflower oil and maize meal.

In this report, the “spread” is the percentage difference between the producer price and the retail price. The commission analyses spreads to see how price changes move through the value chain and where the gap is widening or narrowing.

A widening spread can suggest opportunistic “rocket and feather” pricing, where processors or retailers raise prices quickly when costs rise but reduce them slowly when costs fall.

The outlook for essential food prices remains mixed, the commission says.

In some markets, such as canned pilchards and brown bread, margins narrowed at times and price increases were more in line with changes in costs.

In other staples, the report indicates, retail prices stayed high even when upstream costs were stable or falling. This is most visible in eggs, IQF chicken, sunflower oil and maize meal.

The commission says it may mean many consumers, especially low-income households, do not benefit quickly from lower input costs.

The commission will continue to monitor these trends to support food affordability and food security.

Each edition of the CoL report includes a “deep dive” into one key cost driver. In this edition, the focus is on electricity tariffs.

Electricity is a direct household expense and a major cost for businesses.

When tariffs rise, they put pressure on household budgets and can push up prices across the economy, including food and transport.

The report finds that pricing approaches that add costs on top of costs, including at municipal level, can contribute to prices staying high and tariffs rising over time.

Recent reforms, including the Electricity Regulation Amendment Act, are important for the long term and for improving supply. However, under the current pricing system they may not translate into quick relief for households.

“Addressing the CoL requires greater scrutiny of administered price-setting mechanisms, enhanced transparency and accountability in tariff determinations and targeted protection for vulnerable households.

“Without deliberate attention to how essential service prices are formed and transmitted through the economy, cost pressures are likely to remain entrenched, limiting gains in household welfare and slowing broader economic recovery,” says Commissioner Doris Tshepe.