Salaries rise in September, but cost of living still strains household finances
Higher transport costs are dominating households' budgets.
In September, South African salaries increased slightly, but the cost of living remains a challenge for households. According to the PayInc Net Salary Index released on Wednesday, the average nominal net salary rose to R21,689, a 0.3% increase from August and a 1.8% year-on-year increase. However, the real terms index only rose by 0.1% to R20,178, which is still 2.6% less than a year ago, indicating a decline in purchasing power.
The index measures both nominal and real net salaries, with the key difference being that nominal net salary is the actual amount taken home, while real net salary is adjusted for inflation to reflect true buying power. Elize Kruger, an independent economist, pointed out that while nominal net salaries are gradually rising, year-to-date growth is only 1.7% compared to the 3.7% increase in 2025.
This marginal growth in take-home pay does little to alleviate the strain on households, especially as fuel prices and persistent inflation continue to weigh on their purchasing power.
Since the start of the Middle East conflict in April, fuel prices have surged, driving up operating and transport costs throughout the economy. Kruger explained that these higher transport costs are the main driver of both producer and consumer inflation, leading to two interest rate increases and reduced consumer confidence. The ongoing conflict has further complicated the outlook for fuel prices, with Brent crude oil trading at $115 per barrel at midmorning on Wednesday.
Despite these challenges, National Treasury has offered temporary fuel price relief for November and December through a partial reduction in fuel levies. However, Kruger cautioned that businesses may struggle to fully absorb these fuel price increases, potentially resulting in further price adjustments across the economy. The country's longer-term issue lies in the fact that productivity growth has been lagging behind salary growth.
While labour productivity in the formal non-agricultural sector did accelerate in the first quarter of 2026, this improvement was largely due to a sharper contraction in employment rather than an overall increase in productive capacity. Kruger emphasized the need for improving productivity alongside salary growth to enhance business competitiveness and facilitate sustainable economic expansion.
Written by urgent.news from The Citizen's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
