Households in South Africa continue to face a barrage of price hikes in 2022, as inflation edges toward the top of the Reserve Bank’s range, leading to the costs of living rapidly spiralling out of control, and forcing many to turn to credit and other forms of debt just to make it through to the end of each month.
Following two years of pressure from the Covid-19 pandemic and the government’s heavy lockdowns, Russia’s invasion of Ukraine in 2022 has put the global economy on high alert, with countries trying to curb rising energy and food prices amid inflationary pressure.
Meanwhile, South Africa continues to battle a strained electricity supply, leading to record load shedding, socio-political inability from government inaction, corruption and policy stagnation over the last decade.
Consumer Price Index (CPI) data for March 2022 tracked headline inflation at 5.9%, at the upper boundary of the containment range put in place by the South African Reserve Bank.
Despite headline CPI still being within the ‘allowable’ range, many of the essentials in the basket – fuel, electricity and food – are seeing price increases far outside this range.
Fuel prices
Fuel in the CPI is tracking at 33.2% compared to 2021, and is the main contributor to the relatively high headline CPI. Within the transport category, high fuel prices have also pushed up public transport costs, with year on year inflation at 13%.
A litre of petrol in May 2021 would have cost a motorist R17.23. In May 2022, this has increased by 26.8% to R21.84. A 45 litre tank of petrol that would have cost R775 last year, will now set you back just over R980 – adding over R200 to the bill.
This significant increase has been largely outside South Africa’s control, with global oil prices being pushed up by Russia’s invasion of Ukraine, and the rand’s weakness against a resurgent dollar – the other major component of local fuel prices – being largely at the mercy of global market trends.
The picture for diesel is even worse: a litre of diesel in May 2021 would have cost R14.46 at wholesale prices. In 2022, this has shot up 52% to R21.99 a litre – costing more than a litre of petrol for the first time.
Food prices
Food prices also outstrip headline CPI at 6.7%, with some items in the basket substantially above that. Meat prices stand out as being 9.1% more costly than in 2021, while oil and fats are far more expensive, up 20.4%.
While food prices fluctuate month-to-month, as many households can attest, things have become a lot more expensive over the past year.
The latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows that food prices in April 2022 are about 8.2% more costly than in 2021.
The group tracks a basket of 44 commonly-bought food items, which totalled R4,542.93 in April 2022, around R330 more expensive than the same basket in 2021.
As with fuel, the ongoing war in Ukraine continues to be the biggest global driver of higher food prices, due to disruptions in the global supply chain, and rising energy prices.
Electricity prices
Households continue to pay for incompetence in the power sector, with Eskom increasingly turning to tariff hikes to balance out its debt payments and capital expenditure problems.
Energy regulator Nersa granted Eskom a 9.6% increase in tariffs for direct customers, effective April 2022, with another municipal electricity tariff increase of 7.47% taking effect in July 2022.
The price hikes will take the average electricity tariff in South Africa from just over R1.33 per kWh to around R1.46. The average reflects the national average – urban customers who consume power in higher blocks will pay significantly more than this.
In the CPI basket, electricity prices also far outstrip headline inflation, coming in at an average of 13.3% across all provinces.
Mpumalanga has the highest electricity and energy inflation at 15.3%, followed by Gauteng at 14.8%. The Northern Cape has the lowest inflationary pressure at 11.1% – however, this remains above headline inflation.
How much more you will be paying exactly is dependent on what type of electricity customer you are. Eskom has published its fee adjustments for 2022/23 and has included a fee calculator and comparison tool.
An urban resident using around 200 kWh per month in Gauteng would see their monthly power bill of R550 increase to R600.
Read: Tricks and tips to bring down your cost of living in South Africa
https://businesstech.co.za/news/finance/584724/how-much-youre-paying-for-petrol-electricity-and-food-in-south-africa-versus-a-year-ago/
