Salaries rise in September, but cost of living still strains household finances

Higher transport costs are dominating households' budgets. Salaries rose slightly in September, but rising fuel prices and persistent inflation continue to weigh on household purchasing power in South Africa. The PayInc Net Salary Index released on Wednesday showed that the average nominal net salary rose to R21 689, up 0.3% from August and 1.8% year on year. In real terms, the PayInc Net Salary Index rose marginally in September 2026 to R20 178, up 0.1% from August but still 2.6% lower than a year ago, reflecting the erosion of South Africans’ purchasing power. PayInc Net Salary Index is a monthly economic indicator that tracks average nominal and real net salaries. The core difference between average nominal and real net salaries lies in how inflation and purchasing power are measured: nominal net salary is the literal monetary amount you take home after deductions, while real net salary is that same amount adjusted for inflation to show what you can actually buy. Can salaries stand the pressure? Elize Kruger, an independent economist, noted that nominal net salaries are gradually trending higher, with the year-to-date average up 1.7% versus a 3.7% increase in 2025. Despite this marginal increase in take-home pay, the country’s economic outlook has worsened after renewed tensions in the Middle East. “Since April, significant fuel price increases following the outbreak of the Middle East conflict have driven up operating and transport costs across the economy, affecting households, businesses and energy-intensive industries such as mining and manufacturing.” Fuel prices Kruger said higher transport costs have become the dominant driver of both producer and consumer inflation and have triggered two interest rate increases and weaker confidence. “Transport costs have been a major contributor to rising producer and consumer inflation, with elevated international oil prices continuing to place pressure on the domestic economy.” This is as Brent crude oil was trading at $115 on Wednesday midmorning, with the ongoing Middle East conflict creating further uncertainty around the outlook for fuel prices. National Treasury has provided temporary fuel price relief for November and December through a partial reduction in fuel levies. Risk to businesses Kruger cautioned that businesses may struggle to fully absorb fuel price increases, raising the risk of further price adjustments across the economy. The country continues to face longer-term challenges with productivity growth continuing to lag behind salary growth. According to the latest South African Reserve Bank (Sarb) statistics, labour productivity growth in the formal non-agricultural sector accelerated during the first quarter of 2026. However, this improvement largely reflected a sharper contraction in employment alongside stronger output growth, rather than a broad-based increase in productive capacity. At the same time, growth in formal non-agricultural nominal unit labour costs moderated slightly to 3.5% in the first quarter, while economy-wide unit labour cost growth increased marginally to 3.2% in the second quarter. “These trends highlight the importance of improving productivity alongside salary growth to strengthen business competitiveness and create opportunities for sustainable economic expansion,” said Kruger.