Cost of living remains high despite easing inflation: Competition Commission

South Africans are still paying high prices for basic goods and services despite a slowdown in inflation, according to the Competition Commission’s second “Cost of Living” report.

The report, released on Wednesday, tracks how prices have changed from July 2020 to January 2026, showing that key household expenses including electricity, water, health care, education and food continue to place pressure on budgets, particularly for low-income households.

Electricity and water costs have seen some of the steepest increases. Electricity prices rose by about 85% over the period, while water tariffs climbed by around 68%, both significantly outpacing overall inflation, which increased by 30%. The commission attributed these increases to structural challenges in the utility sector, including ageing infrastructure, high debt and operational inefficiencies.

Health-care costs are also rising faster than inflation. General practitioner consultation fees remained high, with tariff increases in 2026 expected to align with medical inflation of about 4.2%.

Transport costs showed some relief in 2025 as petrol prices stabilised after earlier volatility, leading to a narrowing gap between taxi fare increases and overall inflation. However, the commission warned that renewed instability in the Middle East was already pushing oil prices higher.

Education costs have also continued to climb. Primary education costs increased by 37% and secondary education by 42% since 2020, largely due to rising operational expenses not fully covered by government funding.

Without deliberate attention to how essential service prices are formed and transmitted through the economy, cost pressures are likely to remain entrenched, limiting gains in household welfare and slowing broader economic recovery

—  Doris Tshepe, competition commissioner

The report also examined the gap between producer and retail prices for staple foods such as eggs, chicken, maize meal and sunflower oil. In several cases, it found that price decreases at producer level were not quickly passed on to consumers.

Egg prices, for example, dropped at producer level in mid-2025, but retail prices declined more slowly. Similarly, while the cost of white maize fell significantly in 2025, retail maize meal prices remained high, with a producer-to-retail price gap of 37% recorded in November.

Retail prices for individually quick-frozen chicken also increased despite stable producer prices, while sunflower oil prices were slow to reflect decreases in underlying costs.

The commission noted that such patterns may indicate “rocket and feather” pricing, where prices rise quickly when costs increase but fall slowly when costs decline.

The latest edition of the report placed a particular focus on electricity tariffs, highlighting their broad impact on household expenses and the wider economy. The commission found that pricing structures, including cost layering at municipal level, contributed to persistently high tariffs.

Competition commissioner Doris Tshepe said addressing the cost of living required greater scrutiny of administered price-setting mechanisms, enhanced transparency and accountability in tariff determinations and targeted protection for vulnerable households.

“Without deliberate attention to how essential service prices are formed and transmitted through the economy, cost pressures are likely to remain entrenched, limiting gains in household welfare and slowing broader economic recovery,” she said.

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