Price hikes to hit South Africa in the coming months

Property groups have warned tenants to prepare for a hike in electricity prices from 1 July as the impact of Eskom increases take effect at a municipal level.

From 1 April 2021, the National Energy Regulator of South Africa (NERSA) approved Eskom’s allowable revenue from standard tariff customers to be increased by 15.06% for Eskom direct customers.

An estimated increase of 17.80% for the supply of electricity to all municipalities will be implemented on 1 July 2021. The country’s major municipalities will announce their own individual increases to be applied from 1 July 2021 based on their approved budgets.

  • Based on its 2021/2022 budget the City of Cape Town has advised that the average electricity increase from 1 July will be around 13.5%.
  • The City of Johannesburg and City of Tshwane have both cautioned that the hike will be closer to 14.5%.
  • eThekwini in KwaZulu-Natal has said that its electricity prices could rise by as much as 14.9%.

South Africans should also expect a number of other rates increases from 1 July, with the price of water expected to increase by around 5% across the major municipalities, with the cost of sanitation and refuse removal also set to rise.

Food prices 

Economists have also warned of rising food prices in the coming months due to the soaring prices of key agricultural products – used as inputs in the manufacturing of basic consumer foodstuffs

“(This) poses a conundrum for food manufacturers about whether to absorb these cost increases or try and pass them on to financially constrained consumers, fanning inflation worries,” said John van Tubbergh, sector head for Consumer, Food and Agri at financial services firm RMB.

Food prices have already increased significantly over the past year, with several industry reports pointing to food inflation far above CPI. Data from the PMBEJD’s Pietermaritzburg Household Affordability Index, annualised for March 2021, shows that inflation on Household Food Basket is 12.6%

The PMBEJD in particular has warned consumers to expect food prices to increase even further, likely to be up by 10% for the year.

This is because recent fuel price hikes and a run of electricity price hikes through July impact the entire economy and all along the food value chain. And even when these prices decrease slightly – as is the case with fuel prices in May – these savings are rarely passed on to consumers.

“The full impact of these increases has yet to come through. Based on the current upward trend in food prices, we predict that with the increases in fuel and electricity, that food prices will increase beyond 10% for the 2021 term,” it said.


Read: Some municipalities are not charging what they should for water and electricity in South Africa: Mboweni

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Price hikes to hit South Africa in the coming months