SA salaries edge up, but fuel and inflation erode buying power

Share current article via EmailShare current article via FacebookShare current article via TwitterShare current article via LinkedInStella MapenzauswaEconomics Editor

Opens in new windowOpens in new windowEnter fullscreen mode displaying this image.ExpandYear-to-date statistics suggest that, on average, net salaries are down 2.2% in real terms. Picture: 123RF/Instina The take-home pay of South African salary earners edged up marginally in September, but rising fuel prices and persistent inflationary pressures continue to weigh on the purchasing power of households.

National payment utility PayInc’s net salary index, which tracks 2.1-million salary earners, edged up 0.3% to R21,689 in September compared with August.

In real terms, accounting for inflation, the net salary index increased just 0.1% to R20,178 between August and September but was down 2.6% compared with a year ago, reflecting the erosion of purchasing power experienced by salary earners.

The economic scenario has taken a turn for the worse after renewed tensions in the Middle East, which have driven global oil prices — and by extension domestic fuel prices — higher. This has translated to a surge in transport costs that have become the dominant driver of producer and consumer inflation rates.

Year-to-date statistics suggest that, on average, net salaries are down 2.2% in real terms, limiting consumers’ spending power and weighing on discretionary expenditure and confidence.

“Since April, significant fuel price increases following the outbreak of the Middle East conflict have driven up operating and transport costs across the economy, affecting households, businesses and energy-intensive industries such as mining and manufacturing,” independent economist Elize Kruger said.

While the government’s reintroduction of fuel levy relief until early January will provide some support to households and businesses, the cumulative increase in fuel prices remains substantial, PayInc said.

Read: This is where minimum wage rules are most ignored

The latest data shows that the price of petrol has jumped by nearly 50% and that of diesel by more than 70% since South Africa, a net importer of oil and petroleum products, started adjusting prices in response to elevated global prices after the US-Iran war broke out in late February.

“Given South Africa’s reliance on road freight transport, businesses may struggle to absorb these increases fully, raising the risk of further price adjustments across the economy,” Kruger said.

The latest salary index comes just under a week after a report by private healthcare group Mediclinic showed that financial stress is the leading contributor to poor mental health across all generations in South Africa, as consumers grapple with spiralling cost of living.

A separate report from debt counselling firm National Debt Advisors recently also highlighted the mental health toll of living from payday to payday for the breadwinners of many financially strapped South African households.

For millions of working South Africans the end of the month no longer brings relief and instead financial pressure spills from bank accounts into homes, fuelling marital conflict, disrupting children’s schooling and driving widespread psychological burnout, it said.

On Wednesday, the latest household affordability index from the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) showed that the average cost of the basic food basket for low-income families was up 0.4% at R5,512 in October compared with September. This represented an increase of 1.3% over the same month last year.

The index tracks the prices of 44 basic foods from 52 supermarkets and 36 butcheries in Johannesburg, Durban, Cape Town, Mthatha, Pietermaritzburg, Springbok (Northern Cape) and Mtubatuba (KwaZulu-Natal).

The PMBEJD uses the national minimum wage of R30.23 an hour to calculate how much low-income households have left to spend on food after paying for transport and electricity.

Would you like to comment on this article?Sign up (it's quick and free) or sign in now.

Please read our Comment Policy before commenting.