The Competition Commission's latest Cost of Living Report highlights alarming increases in electricity and food prices in South Africa in recent years.
Image: Ayanda Ndamane/ Independent Newspapers.
Electricity prices surged by a staggering 85% between 2020 and early 2026. Water prices followed a similar upward trajectory, rising by 68%.
This was significantly above overall inflation which increased by 30% over the same period.
The Competition Commission attributed these "entrenched" costs to structural failures within the utility sector, citing ageing infrastructure, high debt burdens at entities like Eskom and Rand Water, and operational inefficiencies.
The Commission released its second Cost of Living (COL) Report on Wednesday, tracking the affordability of basic goods and services from 2020 through to January 2026.
The findings paint a grim picture for household budgets, particularly for low-income families who spend a disproportionate amount of their earnings on basics.
"Under the current pricing system, recent reforms may not translate into quick relief for households," the report noted, specifically highlighting how municipal mark-ups often "add costs on top of costs."
This comes as Eskom's electricity tariff hike of more than 8% took effect for direct customers, and petrol rose by R3.06 a litre while diesel jumped by more than R7 a litre on Wednesday.
Municipalities that buy electricity in bulk from Eskom will implement their own increases, averaging 9.01%.
"Electricity stands out as both a direct household expense and a critical upstream input shaping broader price dynamics across the economy. The persistence of cost-plus pricing at generation and municipal levels has contributed to price stickiness and sustained tariff escalation.
"Although the Electricity Regulation Amendment Act and broader sector reforms mark a fundamental restructuring of South Africa’s energy market, these changes are primarily geared toward improving supply security and long-term sustainability at the generation level. Under the current pricing framework, they may be unlikely to deliver immediate or meaningful tariff relief for households," the report notes.
The report also took a deep dive into the food value chain, monitoring the "spread", the gap between what a producer receives and what a consumer pays at the till.
The Commission flagged a phenomenon known as "rocket and feather" pricing: where retailers are quick to hike prices when costs go up (like a rocket) but are painfully slow to drop them when costs fall (like a feather).
Key food items under the spotlight include:
- Eggs: Despite producer prices falling in mid-2025, retail prices dropped slowly, suggesting savings weren't passed to consumers.
- IQF Chicken: While producer prices remained stable at roughly R45, retail prices for a 1.5kg pack climbed from R96.38 to R101.56 in the latter half of 2025.
- Maize Meal: The farm value of white maize dropped significantly between May and December 2025, yet retail prices remained high.
- Sunflower Oil: The report noted "price stickiness," where retail prices react to cost increases but ignore cost decreases.
Parents are also facing a heavy burden. Since 2020, the cost of primary education has risen by 37%, while secondary education has jumped by 42%. The Commission linked these hikes to insufficient government funding, which forces schools to cover operational shortfalls through increased fees.
In the healthcare sector, general practitioner (GP) consultation fees continue to outpace headline inflation; however, increases in 2026 are expected to stabilise around 4.2%, in line with medical inflation.
While petrol prices showed some stability between April 2025 and January 2026, the Commission warned that the reprieve might be short-lived. Renewed instability in the Middle East has pushed oil prices higher, which is expected to drive up fuel and transport costs from April 2026.
"Addressing the cost of living requires greater scrutiny of administered price-setting mechanisms and enhanced transparency," said Commissioner Doris Tshepe.
Without targeted protection for vulnerable households, Tshepe warned that cost pressures would continue to limit gains in household welfare and slow the country’s broader economic recovery.
Cape Times