South African salary earners saw a modest increase in nominal net salaries during June 2026, but rising inflation continued to erode purchasing power.
This has pushed real take-home pay to its lowest level in around two years, and placed increasing pressure on consumer spending and economic growth.
These findings are from the latest PayInc Net Salary Index, which tracks the average nominal net salaries of about 2,1-million salary earners in South Africa.
“The average nominal net salary increased to R21 598 in June 2026, up 0,4% from May. However, salaries were only 0.5% higher than a year ago, highlighting the subdued pace of earnings growth,” says Shergeran Naidoo, head of stakeholder engagement at PayInc.
The slight increase in nominal salaries masks the reality facing many South African households.
“Although salary earners are taking home marginally more in rand terms, inflation continues to outpace wage growth, steadily reducing their purchasing power,” says independent economist Elize Kruger.
The first half of 2026 has proven particularly challenging for salary earners. Nominal net salaries increased by just 1,5% over the six-month period, while real net salaries declined by 2,1%, reversing the stronger gains experienced over the previous two years.
In June, the PayInc Net Salary Index declined by 0,3% in real terms compared to May and by 3,6% year-on-year, bringing the average real net salary to R20 198, reaching the lowest level recorded in approximately two years.
“The continued decline in real earnings is likely to place increasing pressure on household budgets and consumer spending during the remainder of the year,” says Kruger. “As disposable income comes under strain, households are becoming more cautious with discretionary spending, which could weigh on broader economic activity.”
While higher fuel prices have contributed to rising inflation in recent months, administered price increases are emerging as an equally significant source of financial pressure.
“Many salary earners will soon begin to feel the impact of annual increases in electricity, water and other municipal tariffs,” says Kruger. “These administered prices have consistently increased faster than headline inflation, placing additional pressure on household finances even as salary growth remains subdued.”
Items included in the Administered Price Index account for 12,9% of the consumer price basket and include electricity, water supply, refuse collection, sewerage, assessment rates, fuel, vehicle licence fees and education costs. Although administered price inflation accelerated to 13,7% in May, largely due to fuel price increases, administered price inflation excluding fuel also increased to 7,6%, well above headline consumer inflation of 4,5%.
“Electricity remains one of the largest contributors to administered price inflation, with many municipalities implementing tariff increases well above the inflation rate,” explains Kruger. “These increases not only reduce household purchasing power but also raise operating costs for businesses, affecting economic competitiveness, investment and employment.”
With inflation expectations drifting higher, administered prices remaining elevated and international oil prices once again under pressure from renewed geopolitical tensions, the economic outlook remains uncertain.
“After two years of relatively healthy salary growth, 2026 has marked a turning point for salary earners,” concludes Kruger. “Until wage growth begins to outpace inflation again, many South Africans are likely to remain under financial pressure despite modest increases in nominal salaries.”