President Cyril Ramaphosa has announced the formation of a new task team to address the escalating cost of living in South Africa, where surging prices for food, water, and electricity continue to burden households and fuel demands for swift government action.
Headline inflation had been moving in a positive direction, easing to 3% in February. However, South African households face fresh pressures from an impending energy price shock linked to conflict in the Gulf region, including tensions involving Iran, Israel, and Lebanon.
Thembisa Fakude, senior research fellow and director at the think tank AFIT (Africa Asia Dialogues), warned that all South Africans will feel the impact. Despite the country’s historically good relations with Iran and ongoing oil shipments, global market prices are set internationally. South Africa will not be shielded from the pinch.
Compounding the challenge is the prolonged shutdown of the Sapref refinery — South Africa’s largest facility in Durban with a capacity of 180,000 barrels per day. The refinery, previously operated as a joint venture between BP and Shell, was acquired by the Central Energy Fund. It has remained offline due to damage from 2022 floods and ongoing discussions among the new owners. As a result, the country lacks full domestic refining capacity and relies heavily on imported petroleum products.
Fakude noted that recent fixes to load shedding — the rolling power outages that plagued the nation — came at a significant cost. Households and businesses are now absorbing higher electricity expenses, with administered price increases for electricity and water tariffs rising by between 68% and 85% since 2020.
When asked whether pausing such hikes would undermine the ability of Eskom and water utilities or municipalities to deliver services and fund necessary capital investments, Fakude highlighted the current reliance on expensive petroleum to generate power in the absence of sufficient alternative resources. While the government resolved load shedding, the financial burden is now being passed on to consumers.
He pointed to growing efforts to encourage a transition to alternative energies, including household water reservoirs that capture rainwater during recent good rainfall periods. Yet even water has become markedly more expensive, and overhauling energy systems or grids for alternatives remains costly.
Fakude described the outlook as “tough times ahead,” worsened by the ongoing standoff in the Gulf, including Israeli actions in Lebanon that have displaced over a million people and caused significant casualties, alongside Iranian responses.
On reviving Sapref, plans aim to bring the facility back online by July 2027. From a broader policy perspective, Fakude suggested several measures to reduce South Africa’s vulnerability to Middle Eastern energy and fertilizer supplies.
These include promoting greater use of public transportation, which has improved but suffers from low ridership due to longstanding safety concerns. The railway system connects major cities and business districts effectively and could ease pressure on fuel demand if uptake increases.
Another option is reintroducing remote work where feasible, reducing the need for daily commuting by private vehicles. Fakude urged looking to creative approaches adopted by other countries, such as India, to cushion citizens from high prices stemming from global disruptions.
South Africans are already dipping deeper into their pockets for daily essentials, and the combined effects of global energy volatility and domestic administered price increases are set to intensify the strain on households in the months ahead. The newly formed task team is expected to coordinate responses across government to mitigate these impacts on the cost of living, fuel security, and food security.