Competition Commission warns lower input costs are not always reaching consumers.
South Africa’s cost-of-living pressures are continuing despite a slowdown in overall inflation, with electricity, water, petrol, transport, healthcare and communication costs rising faster than consumer prices overall. At the same time, retail prices in several food markets remain elevated or continue to increase even as input costs and other production costs decline, according to the third Cost of Living (COL) Report released by the Competition Commission of South Africa.
- Between July 2025 and July 2026, electricity prices rose 8.1% and water prices 10.1%, compared with overall inflation of 4.3%. Over the past six years, increases in both tariffs have also significantly outpaced overall inflation, adding to pressure on household budgets, particularly for low-income households.
- Transport costs have also risen sharply. Petrol prices increased 26% between January and July 2026, driven largely by global pressures linked to the Middle East conflict. Higher fuel costs extend beyond the cost of commuting, increasing production, logistics and distribution outlays across the economy and putting additional pressure on the prices of basic goods.
Minibus taxi fares, one of the main forms of public transport in South Africa, increased 13% over the same period. The Commission raised concerns that commuters could continue to face higher costs even if petrol prices decline, as minibus taxi fares generally increase when fuel prices rise but do not always adjust downwards when fuel becomes cheaper.
- Healthcare costs have also risen faster than overall consumer prices. General practitioner consultation costs increased 3.5% between January 2025 and January 2026. Over six years, such costs rose 38%, compared with cumulative overall inflation of about 36%. Wireless internet service prices increased 4.1% between January and July 2026, slightly above overall inflation of 3.8%.
- The report pays particular attention to food prices and examines how prices move through the value chain, from agricultural inputs to the price paid by consumers at retail level. The analysis is intended to assess whether lower production costs are being reflected in final food prices.
In several markets, the link appears weak. Producer prices for brown bread, maize meal and sunflower oil remain elevated despite significant decreases in the prices of wheat, maize and sunflower seeds, meaning consumers are not fully benefiting from lower grain and oilseed prices.
A similar pattern has emerged in individually quick frozen (IQF) chicken and canned pilchards. Retail prices for both products have increased in 2026 even as producer prices have remained stable or declined. Egg producer prices, meanwhile, have increased substantially since April, broadly coinciding with the sharp rise in fuel prices.
The Commission also examines the “spread” between producer and retail prices. A widening spread does not in itself indicate wrongdoing, but may suggest that final prices are rising faster than underlying costs. The report points to the familiar “rockets and feathers” effect in markets, where prices rise quickly when costs increase but fall more slowly when those costs decline.
The issue is particularly significant for low-income households. Families in the lowest income groups spend about 40.7% of their budgets on food and non-alcoholic beverages and a further 26.1% on housing and utilities. Together, the two categories account for almost 67% of household expenditure. Including transport, healthcare, education and internet services, basic goods and services account for about 84% of their budgets.
This means even relatively small increases in the prices of essential goods and services can have a disproportionate impact on the living standards of the poorest households. A decline in overall inflation alone does not necessarily improve their financial position, as the composition of price increases matters as much as their pace.
The Commission stressed that the report does not make findings of wrongdoing by any particular company. Rather, it is intended to track how prices move through the value chain and identify where additional pressure on consumers is emerging.
The report’s “deep dive” section focuses on water. The Commission says water tariffs are shaped primarily by costs and institutional arrangements across the water value chain, creating a policy challenge of ensuring financially sustainable water services without placing an excessive affordability burden on households.
Ongoing sector reforms could help address these challenges, the Commission said. Greater transparency and consistency in tariff setting, stronger oversight across the water value chain, increased infrastructure investment and incentives for greater operational efficiency will be critical to ensuring that future tariff increases are justified by the efficient cost of providing services.
