Boost for domestic worker salaries in South Africa
Inflation in South Africa has dropped to a new three-year low, with domestic workers’ salaries now increasing in real terms.
Stats SA data showed that annual consumer inflation cooled for the fourth month, dropping from 4.4% in August to 3.8% in September.
This is well below the South African Reserve Bank’s target of 4.5% and should ensure that interest rates decline are cut when the Monetary Policy Committee meets next month.
The last inflation print is also the lowest since March 2021, when the rate stood at 3.2%.
On average, prices increased by 0.1% between August 2024 and September 2024.
Notably, domestic worker wages (surveyed quarterly) rose by an annual 4.1% in Q3 2024 – above the annual increase of 3.9% in Q2 2024.
This means domestic worker wages rose above the headline inflation figure, ensuring real wage growth of 0.3%.
This is a rare win for domestic workers in South Africa, who have faced a challenging few years following the Covid-19 pandemic.
The National Minimum Wage was set at R27.58 per hour in February, which translates to approximately R4,400 per month for full-time work.
Nevertheless, actual earnings are significantly lower, with the average domestic worker earning R3,349 per month for women and R3,059 for men.
Returning to the inflation stats, the September CPI figure also finalises the housing rental survey for the third quarter of 2024, which showed that rentals were up 3.3% in the quarter (up from 3.2% in the second quarter).
The rate for flat rentals was 4.1%, for townhouses 3.8% and for houses 2.8%.
Stats SA said that the softer transport inflation due to lower fuel prices was the main drag on the headline rate.
“The transport category entered deflationary territory for the first time in 13 months, with the annual rate falling from 2.8% in August to -1.1% in September,” said Stats SA.
Fuel prices dropped for the fourth straight month and are now 9.0% lower than a year ago.
A litre of inland 95-octane petrol was R22.19 in September, the lowest price since February 2023 (R21.68).
Price increases for vehicles also slowed to an annual rate of 3.6% in September 2024, down from a high of 8.4% in September 2023.
Looking elsewhere, annual food & non-alcoholic beverages (NAB) inflation was 4.7%, unchanged from August.
Softer annual rates were recorded for hot beverages, meat, bread & cereals; sugar, sweets & desserts; and oils & fats.
Hot beverages continued to see a higher annual rate of change at 15.8%. This was, however, cooler than August’s 17.5%/
Elsewhere, vegetables, fruit, cold beverages, and fish recorded higher rates in September. while nflation for milk, eggs & cheese was stable.
The food & NAB price index increased by 0.6% in September compared with August, which is the highest monthly rise since January this year (also 0.6%).
The alcoholic beverages and tobacco category registered an annual rate of 4.7% – up from 4.3% in August.
Beer prices increased by 5.2%, spirits by 4.3%, and wine by 4.0% in the 12 months to September.
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