The Competition Commission is urging businesses operating in essential sectors such as food, energy, transport, education, healthcare and digital services to be more transparent and accountable in their pricing practices.
Commenting on the commission’s Cost of Living report, Nelisiwe Khumalo, senior associate in competition law practice at Cliffe Dekker Hofmeyr, said costs have increased well above general inflation.
The report, released in September, showed that the cost of living for South Africans has risen sharply, particularly for low-income households. Essential goods and services such as food, electricity, water and transport have become significantly more expensive.
“For example, over the past five years (2020–2025), electricity prices rose by about 68% and water tariffs increased by around 50%. Meanwhile, wages have failed to keep pace. Salaries have remained stagnant while prices continue to rise,” Khumalo said.
The real purchasing power of South Africans, especially lower-income households, has declined significantly.
Khumalo said the commission also noted that the average worker now spends over 57% of their income on transport and electricity, leaving very little for food and other necessities.
The report also noted that when input costs increased, consumer prices tended to rise just as quickly. However, when input costs decreased, prices were often slow to fall — if they fell at all.
“For example, when fuel prices go up, taxi fares increase almost immediately. But when fuel prices go down, taxi fares rarely decrease at the same pace. The same pattern has been observed with the prices of brown bread and sunflower oil. Even when input costs drop, retail prices often remain high.”
Khumalo said this issue, known as price stickiness or “rocket and feather” pricing, occurs when prices rocket up with rising input costs but feather down slowly, or not at all, when costs fall.
Khumalo said the report highlighted that weak competition and inefficiencies in the value chains for products such as sunflower oil, brown bread and maize meal — a staple food in South Africa — may contribute to this behaviour.
“For many homeowners, monthly payments and credit costs have become significantly more expensive, tightening already stretched household budgets. This is particularly challenging since salaries have not grown at the same rate.”
She said the report also pointed out that official inflation statistics did not fully capture this burden.
The commission recommends a collaborative and evidence-based approach in terms of curbing the above-inflation administered prices — being the municipal tariffs such as pricing for water and electricity — and also promoting competition and responsible pricing in essential goods and services.
— Nelisiwe Khumalo of Cliffe Dekker Hofmeyr
“The Consumer Price Index (CPI) uses owner-equivalent rent as a proxy for housing costs rather than actual bond repayments. As a result, the real financial pressure on bonded households is greater than inflation figures suggest.”
She said the commission expressed concern about inefficiencies and weak competition in key value chains. It emphasised that price stickiness might reflect poor competition or opportunistic pricing in essential sectors.
She said the commission has called for greater transparency so that changes in input costs translated more fairly to consumer prices.
Khumalo said the commission has expanded its price monitoring work beyond food products to include other essential services.
“This means regular scrutiny of pricing structures and profit margins, especially in regulated markets, should be expected.”
Khumalo said internet access has become a basic necessity and the commission has been paying close attention to this sector and is actively monitoring pricing trends.
“Stricter rules and interventions aimed at ensuring affordable digital connectivity are expected in the future,” Khumalo said.
Khumalo said the report made it clear that addressing these issues required joint action between government and business.
“The commission recommends a collaborative and evidence-based approach in terms of curbing the above-inflation administered prices — being the municipal tariffs such as pricing for water and electricity — and also promoting competition and responsible pricing in essential goods and services.”
She said this included ensuring that reductions in input costs were passed on to consumers quickly, rather than allowing profit margins to remain elevated.
“It highlights that government should be responsible for curbing the administered prices and then businesses would be responsible for reasonable pricing for essential goods and services.
“If this approach is followed and this collaboration happens, then maybe we will see an improvement in the cost of living for South Africans,” Khumalo said.
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