- South African consumer confidence improved as slower food price rises gave lower income families relief before fuel prices jumped up.
- The South African Reserve Bank raised interest rates to 7.25 percent on 23 September because of rising global oil costs.
South African households have held up better this year than many expected, and that resilience is now being tested by a familiar pressure point: fuel.
Earlier in September, we reported that consumer confidence had improved, from -19 to -13, with lower-income households driving most of that gain, helped by food prices rising more slowly than before. Retail sales for July backed that up, coming in stronger than economists had predicted.
Then, on 23 September, the Reserve Bank raised interest rates for the first time since May, pushing the repo rate from 7% to 7.25%. The bank pointed to rising oil prices, driven by the ongoing conflict between the US, Israel and Iran, as the main reason.
South Africa imports almost all its fuel, so global oil price swings land directly on local pump prices, and early projections suggest another steep increase in October, potentially pushing petrol close to R30 a litre.
This is worth watching closely, because fuel costs tend to ripple outward, pushing up the price of transporting food and goods, which can eventually show up in grocery bills too, the exact area that’s been giving lower-income households some breathing room.
The Pietermaritzburg Economic Justice and Dignity Group’s September data shows both sides of this picture. The average household food basket rose to R5,488.06, up R108.64 over the past year, a real but fairly modest increase given everything else happening in the economy. At the same time, the gap between wages and what families actually need remains wide: a minimum wage worker’s family is still over 50% short of what it costs to eat a properly nutritious diet, even after covering transport and electricity.
None of this means the improvement in confidence and spending wasn’t real, it was, and it reflects genuine relief households have felt this year. What it does mean is that this relief was always going to be tested by something, and fuel, the one cost South Africa can’t fully control, is now that test.
How households weather the next few months will say a lot about whether this year’s gains can hold.
