By Thapelo Molefe
The country’s poorest households are bearing the brunt of electricity price increases that have far outpaced inflation, with cumulative electricity inflation reaching 100.5% since January 2020 while water inflation has climbed to 85%, according to the latest Competition Commission Cost of Living Report.
The report, released on Friday, shows how the rising cost of essential services has steadily eroded the purchasing power of households, particularly those with the least money to spare.
Overall consumer prices rose by about 36% over the same period, meaning electricity prices increased at nearly three times the pace of general inflation.
The Commission found that the lowest-income households spend 40.71% of their expenditure on food and non-alcoholic beverages and another 26.1% on housing and utilities.
Electricity alone accounts for 5.5% of their total household expenditure.
“Electricity and water continue to rank among the most significant administered expenses faced by South African households and remain indispensable to both household wellbeing and economic activity,” the Commission said in the report.
Between July 2025 and July 2026, electricity prices increased by 8.1%, almost double the 4.3% headline inflation rate.
“As essential services with few practical substitutes, increases in electricity and water tariffs have an immediate and unavoidable impact on household expenditure,” the report states.
It says higher electricity costs increase the operating expenses of businesses and other institutions, creating the potential for higher prices for goods and services.
The report said the persistent increases were linked to structural problems like ageing infrastructure, rising operating and maintenance costs, and the need for continued investment in electricity networks.
It also raised concerns about the way electricity tariffs are determined and said pricing mechanisms need greater scrutiny.
“Consideration is given to the pricing mechanisms used to determine electricity tariffs such that the high cost of electricity concerns are addressed adequately going forward,” the Commission said.
Cabinet has approved a revised electricity pricing policy for public consultation that includes increasing free basic electricity for qualifying households from the current 50kWh to between 200kWh and 300kWh.
The report also notes suggestions that 350kWh is the minimum amount of electricity required to cover essential household needs.
Water is adding to the pressure, with prices increasing by 85% since 2020 and by 10.1% in the year to July 2026.
The Commission said the absence of an independent economic regulator for water was a concern and that stronger oversight could help address high tariffs and differences between municipalities.
“The establishment of an independent economic regulator is a necessary step in addressing the high tariffs faced by consumers and may bring some uniformity in pricing across municipalities,” it said.
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