The PayInc Economic Index, which tracks the monthly value of electronic transactions cleared through PayInc alongside wholesale cash demand, showed a significant decline in May 2026, as rising costs and global tensions take a toll on households and businesses.
“The index declined by 2,1% month-on-month to 102.6 in May 2026, marking the lowest level since November 2025,” says Shergeran Naidoo, head of stakeholder engagement at PayInc.
He adds: “Despite remaining 4% higher than a year ago, the latest data signals a moderation in economic activity over the past two months.”
The PayInc Economic Index shows that both the volume and value of transactions remained largely unchanged in May. The primary contributors to the weaker outcome were higher inflation forecasts, with consumer price and producer price indices rising significantly, alongside a slight tapering in cash demand.
“Households and businesses have faced mounting pressure due to consecutive fuel price increases and a 25-basis-point interest rate hike announced in late May,” says independent economist Elize Kruger. “Combined with declining consumer and business confidence, these factors are expected to weigh on economic activity in the months ahead.”
Other timely economic indicators mirrored this slowdown. The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 49.6 in May from 51.6 in April, indicating a return to contraction in private sector activity. Weakening demand drove the decline, with new orders falling at the fastest pace this year and output slipping. Cost pressures intensified amid higher fuel prices, pushing selling price inflation to multi-year highs.
Meanwhile, the Absa PMI remained above the neutral 50-point mark for a second consecutive month at 50.8, down from 52.6 in April. While better than the first-quarter average of 48.3, the survey reflected a deterioration in conditions. The exception remains the new vehicle market, where total vehicle sales increased by 12,8% year-on-year in May, and new car sales rose by 16,3%.
The volume growth in EFT debit and credit transactions and DebiCheck, processed through PayInc contracted slightly in May, while PayShap and Real-Time Clearing (RTC) volumes showed modest increases. The total number of transactions cleared through PayInc fell to 185,5-million in May from 186,3-million in April, though still up 5,2% compared to May 2025. The nominal value of electronic transactions increased marginally to R1,369-trillion. Supply of cash to banks also declined, reflecting lower demand.
The index is published in real terms, deflated by a combination of headline CPI (75% weighting) and PPI for final manufactured goods (25% weighting). Forecasts for May indicated consumer inflation at 4,6% and PPI at 6,7%, driving a nearly full percentage point rise in the deflator and contributing to the monthly decline in the index.
According to Kruger, the ongoing geopolitical conflict in the Middle East has already influenced energy costs, with petrol and diesel prices up cumulatively by approximately R8/l and R10/l respectively by early June. Estimates by the Bureau for Economic Research show the higher fuel prices could add approximately R45-billion in costs to the economy during the second quarter.
The likelihood that businesses can fully absorb these increases is low, raising the prospect of broader inflationary pressures across the economy. This has already contributed to a more cautious monetary policy stance from the South African Reserve Bank, adding further pressure to growth prospects.
“While the economy remains resilient, the latest PayInc Economic Index points to emerging pressures that could weigh on growth in the months ahead,” says Kruger.