The cost of living in South Africa is undoubtedly skyrocketing. Statistics South Africa (StatsSA) indicated in its 2021 statistics that annual consumer inflation increased to 5.9% in December 2021, the highest in almost 5 years. The factors attributed to the increase were transport, food and non-alcoholic beverages as well as housing and utilities. In addition, the factors driving inflation are anticipated to remain in place for the remainder of the year. In response to this, the South African Reserve Bank hiked the repurchase rate by 25 basis points in January 2022 and has a number of interest rate hikes in the pipeline. This will exacerbate the cost of home loans, vehicle instalments, credit cards and overdrafts facilities.
Petrol prices
Petrol prices spiked by 40.5% in December 2021 as compared to the prior year. The price of inland 95-octane petrol recorded an all-time high of R20.14c per litre in February 2022 compared to R6.32c per litre in February 2012. This is an increase of 218% in a period of 10 years. The combination of a weaker rand and an increase in the international Brent crude oil price remain the primary drivers of petrol prices in South Africa. Transport inflation contributed 2.3% of the 5.9% consumer inflation rate in 2021. The 68 cents per litre cut that was introduced in January 2022 was not sufficient to offset the overall annual increase in petrol prices. This had a huge knock-on effect on public transport and food prices in general.
Rent and Utilities
Rent inflation increased from 1.3% in November 2021 to 1.9% in December 2021. While a one-bedroom apartment in Pretoria central costed R2900.00 per month in 2012, the same apartment costs R4800.00 per month in 2022 (using private property rates). This is an increase of 66% in a decade. It is worth noting however, that rental inflation has been persistently weak for the longest time and has been below the 4.5% midpoint since June 2018.
Electricity prices
South African citizens are bound to experience an electricity price increase in April 2022 despite persistent loadshedding and energy production concerns surrounding Eskom. Electricity prices increased by 167% between 2010 and 2020. The average electricity cost per kWh was R110.93c in 2020 compared to R41.57c in 2010. It is worth noting however that the cost of electricity varies by user type and location. The Energy utility of South Africa “Eskom” has applied for an electricity price increase of 20.5% for the 2023 financial year, effective on the 1st of April 2022. This will push the cost of producing goods and services to unprecedented levels in South Africa considering that energy forms a significant part of production in most, if not all, industries.
Food Prices
Basic food prices are no exception. A 700g loaf of brown bread costed R8.25c in July 2012 compared to R15 in February 2022 while a 5kg bag of maize meal costed R25.93c in 2012 compared to R57 in 2022 (NAMC, 2012). This is an increase of 81% in the price of brown bread and 120% increase in the price of maize meal in a space of 10 years. In overall, Food price inflation marginally slowed to 5.9% in December 2021, compared to 6.0% in November 2021. For the entire 2021, food price inflation averaged 6.5%. The most notable increase was for meat, which recorded a slight increase of 8.6% in December 2021, up from 8.5% in November 2021. Beef products dominated the increase between November and December, with rising prices of steak, beef stew and mince by 2.8%, 2.4% and 1.3%, respectively.
This article is credited to Thabang Kumalo
