The take-home pay of South African salary earners increased marginally in September, according to data from National payment utility PayInc. The net salary index, which tracks 2.1-million salary earners, edged up 0.3% to R21,689 in September compared with August. This slight increase was largely offset by rising fuel prices and persistent inflationary pressures, which continue to weigh on households. As a result, the real-term increase in the net salary index was just 0.1% to R20,178 between August and September.
In year-on-year terms, the net salary index was down 2.6% compared with September last year, reflecting the erosion of purchasing power experienced by salary earners. According to independent economist Elize Kruger, significant fuel price increases since April have driven up operating and transport costs across the economy, affecting households, businesses, and energy-intensive industries. The renewed tensions in the Middle East have driven global oil prices higher, translating to a surge in transport costs that have become the dominant driver of producer and consumer inflation rates.
The impact of rising fuel prices on households and businesses is evident in the data. Year-to-date statistics suggest that, on average, net salaries are down 2.2% in real terms, limiting consumers' spending power and weighing on discretionary expenditure and confidence. The government's reintroduction of fuel levy relief until early January will provide some support to households and businesses, but the cumulative increase in fuel prices remains substantial. PayInc noted that the price of petrol has jumped by nearly 50% and that of diesel by more than 70% since South Africa started adjusting prices in response to elevated global prices.
The effects of financial stress on households are far-reaching. A report by private healthcare group Mediclinic showed that financial stress is the leading contributor to poor mental health across all generations in South Africa. Consumers are grappling with spiralling cost of living, and for millions of working South Africans, the end of the month no longer brings relief. Financial pressure spills from bank accounts into homes, fuelling marital conflict, disrupting children's schooling, and driving widespread psychological burnout.
The Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) released its latest household affordability index, which showed that the average cost of the basic food basket for low-income families was up 0.4% at R5,512 in October compared with September. This represented an increase of 1.3% over the same month last year. The index tracks the prices of 44 basic foods from 52 supermarkets and 36 butcheries in seven major cities.
The PMBEJD uses the national minimum wage of R30.23 an hour to calculate how much low-income households have left to spend on food after paying for transport and electricity. According to Elize Kruger, businesses may struggle to absorb the increases in fuel prices fully, raising the risk of further price adjustments across the economy. Given South Africa's reliance on road freight transport, the impact of rising fuel prices will be felt across various sectors.
The latest salary index and household affordability data paint a concerning picture of the state of South African households. With rising fuel prices and inflation continuing to erode purchasing power, households are under significant financial pressure. The effects of this pressure are evident in the increasing cost of living, poor mental health, and decreased discretionary expenditure. As the economic scenario continues to deteriorate, households and businesses will need to adapt to the changing environment.
Key points
- South African salary earners see marginal 0.3% increase in take-home pay to R21,689 in September.
- Real-term increase in net salary index was just 0.1% to R20,178 between August and September.
- Net salaries are down 2.2% in real terms year-to-date, limiting consumers' spending power.
