Electricity remains one of the biggest household expenses, with the Competition Commission SA warning that consumers will continue to face significant price hikes in the coming years.
This comes as South Africans grapple with recent fuel increases and now face an 8.76% hike in Eskom electricity tariffs, which kicked in from Wednesday.
The increase takes immediate effect for Eskom direct customers, while municipalities that purchase electricity in bulk will implement new tariffs from 1 July, with an increase of 9.01%.
The commission released its Cost of Living (CoL) report on Wednesday, with economist Andiswa Sibugwana noting that electricity tariffs have risen faster than headline inflation over the past decade.
“As a non-food item and largely non-substitutable good, electricity price increases intensify economic pressure on low-income households, many of whom rely on prepaid meters and have limited ability to adjust consumption,” she said.
The report found that in the lowest-income households, electricity is the second-largest component of spending after rent.
“Notably, spending on electricity exceeds expenditure on several other essential goods and services in decile 1 [households earning R2,000], such as maize meal (4.7%), brown bread (3.3%), and minibus taxi fares (4.3%). This highlights the disproportionate burden of electricity on already constrained household budgets,” the report stated.
It further warned that electricity prices are likely to continue rising due to an under-calculation of Eskom’s costs by approximately R54bn by the National Energy Regulator of SA [Nersa].
Following tariff increases in July 2025, electricity inflation rose sharply to about 85% over five years, while water inflation reached 68%.
The report highlighted that overall headline inflation remained relatively low at just over 30% during the same period.
“As energy and water costs filter through production and distribution chains, these increases contribute to broader inflationary pressures across goods and services.
She said it was therefore concerning that electricity and water supply prices continue to rise sharply year-on-year, with significant and disproportionate implications for poorer households and overall welfare outcomes.
Economist Raksha Darji from the commission said as much as government interventions exist, the cost of living is still increasing.
“Electricity prices do place quite a high burden on households’ budgets. We find that electricity accounts for almost 5.5% of low-income households’ expenditure. And so this is a concern. This is what we are flagging.
“And in the short term, it is likely to continue this way, because as we see, the increases are coming through again. But with the energy reforms that are taking place, we hope that in the longer run, these prices will come down,” she said.
Darji added that for low-income households, this continues to remain a problem.
“I think the government interventions are in place. As we’ve seen even with the fuel price increase, there’s been a cut in the levy, which does help cushion the increase a little bit. But I think the reality is that the cost of living is very high, and the poorest households would face the effect of this quite significantly,” she added.
Sowetan
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