Business

Price pressure looms as electricity hikes set to hit South Africa in 2026

Published

11 hours ago

September 25, 2025

Chiraag

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Rising prices ripple through the economy

South Africans may be enjoying some relief at the fuel pumps, but fresh warnings suggest households and businesses will soon face another wave of price increases. Producer price inflation (PPI), which tracks the costs faced by manufacturers before goods reach consumers, rose to 2.1% year-on-year in August, above expectations of 1.8%.

The biggest driver was food. Prices in the food, beverages and tobacco category jumped 4.3% in August, with meat alone staying stubbornly high at 18.5%. This spike reflects the ongoing effects of the foot-and-mouth outbreak, which has tightened supply. Fruit and vegetable prices also crept up, while oils, fats and bakery products all recorded increases.

Although grain products, dairy, petrol and diesel helped offset some of these pressures, the broader picture points to persistent cost strain across multiple sectors.

Electricity hikes set the stage for 2026

While inflation may remain relatively subdued through 2025, economists are warning of a turning point from 2026 onwards. Nedbank’s economic unit projects that PPI will average around 2% this year, before edging up to 4% by year-end. The real challenge, however, comes with energy.

The National Energy Regulator of South Africa (Nersa) has already approved steep tariff increases: 12.7% for 2025–26, followed by 8% annually for the next two years. These hikes will ripple into every corner of the economy, raising costs not only for households but also for businesses, who will inevitably pass them on to consumers.

In practice, this means South Africans could face a double blow. First, through higher electricity bills at home, and second, through increased prices for goods and services as producers adjust to higher operating costs.

The meat of the matter

For now, food remains the single biggest factor shaping producer inflation. Meat prices are particularly sticky, with the foot-and-mouth outbreak continuing to put pressure on livestock supply. Economists expect this to keep food inflation elevated into 2026, although higher field crop production may provide some relief.

Other categories, such as metals and machinery, have also ticked upward, highlighting how costs are building beyond just food and fuel.

Risks beyond South Africa

Nedbank has flagged further risks that could amplify inflationary pressure. A volatile rand, shifts in global demand, and geopolitical tensions in the Middle East could all unsettle oil markets and trigger unexpected fuel price shocks. Although global oil prices remain subdued for now, this fragile balance could change quickly.

What it means for consumers

For households already squeezed by years of rising living costs, these warnings are sobering. While inflation may look manageable in the short term, structural challenges, especially electricity tariffs, will feed through to grocery aisles, service bills, and the broader cost of living from 2026.

The signs are clear: South Africans should brace for tighter budgets in the coming years, as the price of power and the cost of food combine to push everyday expenses higher.