JOHANNESBURG, Gauteng — Consumers are increasingly feeling the financial squeeze as the cost of South Africa’s basic food basket surges, driven by a complex web of global conflicts, local climate challenges, and domestic infrastructure deficits. According to the latest Household Affordability Index tracked by the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD), the price of essential groceries has skyrocketed from R3,413 in 2020 to R5,530 this year—a staggering 62% increase that is vastly outpacing wage growth.
To understand the pricing dynamics forcing households to tighten their belts, we spoke with Annabel Bishop, Chief Economist at Investec, who outlined the multi-layered factors driving up everyday essentials, from the petrol pump to the supermarket shelf.
The Fuel Factor and Inflationary Pressures
According to Bishop, surging fuel prices are currently overwhelming other cost drivers in the economy. Since the outbreak of the Middle East war in March, local petrol prices have risen by R5.48 a liter. This massive jump has pushed Producer Price Inflation (PPI) up to 5%, a significant leap from the 3.1% recorded earlier in the year.
While the international oil price has recently eased to around $83 a barrel—down from highs exceeding $100 just weeks prior—the local impact remains severe. Bishop noted that recent petrol price cuts in July and August saved consumers over R2 per liter. Without those reductions, the Middle East conflict would have added over R7 per liter to local fuel costs this year.
Looking ahead, a minor 52-cent per liter petrol hike is anticipated for September. However, Bishop expects future fuel price movements to remain volatile but generally trend downward in the long term, avoiding the massive R3-plus per liter hikes experienced in April and May.
Climate, Disease, and Geopolitics at the Checkout
The 62% jump in the food basket over the past five to six years is tied to multiple compounding crises. Bishop pointed out that foot-and-mouth disease significantly inflated meat prices across the board. This did not just affect prime cuts; it drove up the cost of cheaper alternatives and even chicken heads and feet, as consumers substituted away from more expensive meats.
Additionally, an El Niño-driven drought in 2023 and 2024 severely impacted local grain production, driving up the cost of cereals, bread, maize, and wheat. Global geopolitical tensions, including the Russia-Ukraine and Middle East wars, have also inflated the cost of agrochemicals and fertilizers, which rely heavily on oil-based feedstocks.
There is, however, a silver lining on the agricultural front: a La Niña weather pattern in 2025 and 2026 has brought positive relief to local fruit, vegetable, and maize prices, offering slight volatility in an otherwise upward-trending market.
The Utility Burden: Eskom and Water Woes
Beyond groceries and transport, municipal bills remain a heavy burden. While the end of national load shedding has been a massive boon for economic growth, Eskom’s return to profitability has not translated into lower tariffs for the public. Electricity price increases remain well above the central bank’s 3% inflation target midpoint, frequently exceeding 10% and blowing past the upper limits of the 3% to 6% target band.
Furthermore, localized electricity outages—often referred to as “load reduction”—continue to disrupt suburbs and industrial areas. This forces businesses to invest in expensive backup power systems, costs that are ultimately passed down to the consumer. Bishop also noted that state capture historically hollowed out the state-owned enterprises responsible for water and electricity, leading to a severe lack of maintenance and repairs. These systemic failures raise the cost of doing business, directly impacting the prices consumers face at the checkout counter.
The Untapped Solution: Local Energy Extraction
When asked what single lever the government could pull to bring medium-term relief to households, Bishop argued there is no simple silver bullet, but pointed to a massive missed economic opportunity: domestic oil and gas extraction.
South Africa holds enormous fuel reserves off the coast in Western Cape waters close to Namibia. Bishop argued that allowing the country to extract, produce, and sell its own oil would strengthen the rand, making all imports—from petrol to everyday goods—substantially cheaper. She criticized the current Minerals and Petroleum Bill for disincentivizing investors, noting that neighboring Namibia has successfully reaped the rewards of similar offshore basins while South Africa lags behind due to regulatory hurdles.
Reflecting on past policy failures, Bishop added that if the government had removed limits on private electricity self-generation and invested heavily in green energy back in 2019, the country could have entirely avoided the suffocating load shedding crisis of the early 2020s. Today, she stresses that unlocking domestic energy resources remains critical to achieving energy sufficiency and insulating South African households from future global oil shocks.